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Thread: There is only one thing that has to be followed in this countries economy.

  1. #51
    A Character Tennyson's Avatar
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    Quote Originally Posted by jbander View Post
    Wonder what anyone thought would happen when the top tax rate went from 70% to 28% , It was the basis of the trickle down lie.
    If what you say is true, the economy would have been booming under Carter and none of this would have happened because of Reagan's tax rate cuts:

    The economy grew by one-third, which was the size Germany’s third largest economy in the world as a result of the tax rate cuts.

    Total federal revenues doubled from just over $517 billion in 1980 to more than $1 trillion in 1990.

    There was a 92 month expansion of the economy, which ended in 1990 after taxes were increased.

    The GDP growth rate for Reagan's term was 4.33%, with a 7.2% in 1984.

  2. #52
    Radical Centrist BigLeRoy's Avatar
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    Quote Originally Posted by Tennyson View Post
    I am not seeing anything in your post that directly addresses this statement of mine:

    Reagan's fiscal policy of tax rate cuts is what made inflation drop. The tax rates dropped significantly, which created more discretionary after tax money, which meant more spending, which increased demand for money, which meant the Fed needed to provide more money, which meant the Fed supplied more money that was actually useful for something other than manipulating the price level. This only happened because of Reagan and his tax policies and would not, and did not, happen under Carter's fiscal policies.

    Volcker’s policies were pretty close under Carter as they were under Regan, but with a worsening effect on inflation. There was a symbiotic relationship between Volcker’s policies, at the behest of Reagan, and the tax rate cuts of Reagan. The tax rate cuts would not have dropped the inflation rate at the staggering rate and pace that it dropped alone and the Fed’s policies would not have dropped the inflation rate at the staggering rate and pace that it dropped alone. The rate of inflation dropped significantly along with the tax rates.

    This has not been addressed: MV = Py does not necessary equal inflation. The increase in M causes an increase in P only if assumptions are made and M is defined with a general agreement, which today it is not.
    I see what your problem is, then: TERRIBLE reading comprehension. Mankiw is saying that fiscal policy had NOTHING to do with why inflation dropped, and in fact was working in the OPPOSITE direction, and would have made inflation WORSE:

    Volcker did succeed at reducing inflation. Inflation came down from almost 10 percent in 1981 and 1982 to about 4 percent in 1983 and 1984. Credit for this reduction in inflation goes completely to monetary policy. Fiscal policy at this time was acting in the opposite direction. The increases in the budget deficit during the Reagan administration were expanding aggregate demand, which tends to raise inflation. The fall in inflation from 1981 to 1984 is attributable to the tough anti-inflation policies of Fed Chairman Paul Volcker."

    I shall address the rest of your economic illiteracy later. In the meantime, try to focus on what Mankiw is actually saying here, and how it utterly CONTRADICTS what you are saying.

  3. #53
    A Character Tennyson's Avatar
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    Quote Originally Posted by BigLeRoy View Post
    I see what your problem is, then: TERRIBLE reading comprehension. Mankiw is saying that fiscal policy had NOTHING to do with why inflation dropped, and in fact was working in the OPPOSITE direction, and would have made inflation WORSE:

    Volcker did succeed at reducing inflation. Inflation came down from almost 10 percent in 1981 and 1982 to about 4 percent in 1983 and 1984. Credit for this reduction in inflation goes completely to monetary policy. Fiscal policy at this time was acting in the opposite direction. The increases in the budget deficit during the Reagan administration were expanding aggregate demand, which tends to raise inflation. The fall in inflation from 1981 to 1984 is attributable to the tough anti-inflation policies of Fed Chairman Paul Volcker."

    I shall address the rest of your economic illiteracy later. In the meantime, try to focus on what Mankiw is actually saying here, and how it utterly CONTRADICTS what you are saying.
    You have yet to address the first part.

  4. #54
    Radical Centrist BigLeRoy's Avatar
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    Quote Originally Posted by Tennyson View Post
    You have yet to address the first part.
    The first part??

    The first part of your post is where you claimed this: "Reagan's fiscal policy of tax rate cuts is what made inflation drop."

    Mankiw is DIRECTLY REFUTING THAT POINT. DIRECTLY. He is pointing out that tax rate cuts serve to EXPAND AGGREGATE DEMAND, "which tends to RAISE inflation".

    Again with the TERRIBLE reading comprehension. Sheesh.
    Thanks from BigBob

  5. #55
    New Member BigBob's Avatar
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    The real truth is that in the 1950's the us tax rates were minimal and the country was going gang busters in new jobs and economic growth. Care to guess what the rates were?

  6. #56
    A Character Tennyson's Avatar
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    Quote Originally Posted by BigLeRoy View Post
    The first part??

    The first part of your post is where you claimed this: "Reagan's fiscal policy of tax rate cuts is what made inflation drop."

    Mankiw is DIRECTLY REFUTING THAT POINT. DIRECTLY. He is pointing out that tax rate cuts serve to EXPAND AGGREGATE DEMAND, "which tends to RAISE inflation".

    Again with the TERRIBLE reading comprehension. Sheesh.
    That is not a specific argument against what I stated.

  7. #57
    A Character Tennyson's Avatar
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    Quote Originally Posted by BigBob View Post
    The real truth is that in the 1950's the us tax rates were minimal and the country was going gang busters in new jobs and economic growth. Care to guess what the rates were?
    I am going to say in the 30% range.

  8. #58
    Radical Centrist BigLeRoy's Avatar
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    Quote Originally Posted by Tennyson View Post
    That is not a specific argument against what I stated.
    The hell you say. I am talking to someone who clearly does not understand very basic English. You say the tax cuts are what made inflation drop. Professor Mankiw says they did NOT.

    What is there to dispute??

  9. #59
    A Character Tennyson's Avatar
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    Quote Originally Posted by BigLeRoy View Post
    The hell you say. I am talking to someone who clearly does not understand very basic English. You say the tax cuts are what made inflation drop. Professor Mankiw says they did NOT.

    What is there to dispute??
    I made specific economic statements. You have yet to address the specific statements.

  10. #60
    Radical Centrist BigLeRoy's Avatar
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    Quote Originally Posted by Tennyson View Post
    I made specific economic statements. You have yet to address the specific statements.
    Yes, you did. You made specific economic statements, that Professor Mankiw flatly contradicted. I don't know how to help you comprehend that any more than I have already tried.

    For example, you have claimed......REPEATEDLY.....that "Reagan's fiscal policy of tax cuts is what made inflation drop". Professor Mankiw, to the CONTRARY, says that "Credit for the reduction in inflation goes COMPLETELY to monetary policy", meaning that fiscal policy gets ZERO credit. And he furthermore adds that "Fiscal policy at this time was acting in the OPPOSITE direction", or, in other words, on its own, would have made inflation WORSE.

    Professor Mankiw is saying, in short, that YOU ARE JUST PLAIN WRONG.

    Is there any way I can make it any SIMPLER for you?!??

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