The best stimulus is allowing people to keep and spend their own money. During the depression of the 1930s, the Democrats raised taxes. This, along with the range of blithering boondoggles known as the "Faint Squeal" (er, I mean the "New Deal") led to what should have been a 1-5 year depression turning into an eleven year depression. The 1920 depression was one year. In the 1890s there were two briefer depressions, and there was one in 1907.
The difference between the 1930s and the earlier depressions was (1) the election of Herbert Hoover and Franklin D. Roosevelt, big government progressives who both used activist government approaches. As well, part of the strategy of the Faint Squeal was to raise income taxes. In 1936 the Fed tightened, exacerbating the slowdown caused by income taxes.
Cutting taxes to the bone would cause an increase in consumer demand. But it would be demand for what people want to spend money on, not for what they want to finance. It is the tax and spend policies of Democrats, Republicans and Keynesian economists that have caused the intermittent economic fluctuations since the Fed was founded in 1913.
Cut taxes, stimulate the economy. Socialism = economic stagnation.
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1 comment:
A tax holiday, for 6 months would be cheaper than the spending approved. It would also have a far greater impact on the economy
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