Where is the US economy headed?

For someone as moronic as okie to harp on common sense is truly disturbing.

Sounds like another "tax break for the rich."

I don't deduct inconsequential items such as that. It is easier to take the standard deduction most of the time.

The consensus of opinion is that the true inflation rate is higher, perhaps significantly so. Poor families, some contend, spend 50% of their income just on food. There is speculation that there could be social unrest.

You see, there’s a scene early in the movie when the minions of SPECTRE, the evil conspiracy, are shown reporting on their profits from dastardly activities. And the numbers are … ludicrously small. I know that’s a running gag in Austin Powers, But it’s true, it’s true!

Even the big one — demanding a ransom for two stolen nuclear warheads — is 100 million pounds, $280 million. Adjusted for inflation, that’s about $2 billion — or one-eighth of the Goldman Sachs bonus pool.

http://www.ncpa.org/sub/dpd/index.php?Article_ID=20129&utm_source=newsletter&utm_medium=email&utm_campaign=DPD
Consumerism Is Keynesianism

One of the most pernicious and widespread economic fallacies is the belief that consumption is the key to a healthy economy. This belief is an inheritance of misguided Keynesian thinking. Production, not consumption, is the source of wealth. If we want a healthy economy, we need to create the conditions under which producers can get on with the process of creating wealth for others to consume, and under which households and firms can engage in the saving necessary to finance that production, says Steven Horwitz, the Charles A. Dana Professor of Economics at St. Lawrence University.

Wealth is created through acts of production that rearrange resources in ways people value more than alternative arrangements.

These acts are financed with savings that come from households refraining from consumption.

Putting more resources in the hands of consumers through a government stimulus package fails precisely because the wealth transferred ultimately hasto come from producers.

This is obvious when the spending is financed by taxation, but it's equally true for deficit spending and inflation.

Before the Keynesian revolution the standard belief among economists was that production was the source of demand and that encouraging saving and production was the way to generate economic growth, says Horwitz.

Thanks to Keynesianism, manipulating the elements of total income (consumption, investment and government spending) became the focus of macroeconomic policy and economic development. It was the Keynesians' theoretical framework that led to the development of the relevant national income statistics and that implicitly informs the popular arguments for more consumption.

For over 150 years defenders of free markets saw consumption as destroying wealth, and saving and production as creating it. They never argued that "stimulating consumption" was the path toward prosperity, says Horwitz.

Souce: Steven Horwitz, "Consumerism Is Keynesianism," Freeman Online, December 9, 2010.

May I ask what evidence your watchdog group has on Chinese wages?

http://www.fairtax.org/site/PageServer?pagename=about_main
What is the FairTax plan?

The FairTax plan is a comprehensive proposal that replaces all federal income and payroll based taxes with an integrated approach including a progressive national retail sales tax, a prebate to ensure no American pays federal taxes on spending up to the poverty level, dollar-for-dollar federal revenue neutrality, and, through companion legislation, the repeal of the 16th Amendment.

The FairTax Act (HR 25, S 296) is nonpartisan legislation. It abolishes all federal personal and corporate income taxes, gift, estate, capital gains, alternative minimum, Social Security, Medicare, and self-employment taxes and replaces them with one simple, visible, federal retail sales tax administered primarily by existing state sales tax authorities.

The FairTax taxes us only on what we choose to spend on new goods or services, not on what we earn. The FairTax is a fair, efficient, transparent, and intelligent solution to the frustration and inequity of our current tax system.

The FairTax:
• Enables workers to keep their entire paychecks
• Enables retirees to keep their entire pensions
• Refunds in advance the tax on purchases of basic necessities
• Allows American products to compete fairly
• Brings transparency and accountability to tax policy
• Ensures Social Security and Medicare funding
• Closes all loopholes and brings fairness to taxation
• Abolishes the IRS

We offer a library of information throughout this Web site about the features and benefits of the FairTax plan. Please explore!

The biggest problem in the USA is not inflation - in fact, there is a push to get some inflation - deflation is the anticipated problem.

http://www.cbsnews.com/stories/2010/12/03/60minutes/main7114229_page2.shtml?tag=contentMain;contentBody

Dec. 5, 2010
Fed Chairman Ben Bernanke's Take On The Economy


(CBS) Pelley: What did you see that caused you to pull the trigger on the $600 billion, at this point?

Bernanke: It has to do with two aspects. The first is unemployment. The other concern I should mention is that inflation is very, very low, which you think is a good thing and normally is a good thing. But we're getting awfully close to the range where prices would actually start falling.

Pelley: Falling prices lead to falling wages. It lets the steam out of the economy. And you start spiraling downward.

Bernanke: Exactly. Exactly.

That's deflation and that's what happened in the Great Depression.

Pelley: How great a danger is that now?

Bernanke: I would say, at this point, because the Fed is acting, I would say the risk is pretty low. But if the Fed did not act, then given how much inflation has come down since the beginning of the recession, I think it would be a more serious concern.

Critics of Bernanke's Federal Reserve have the opposite worry: they say the $600 billion and holding down interest rates could overheat the recovering economy, causing prices to rise out of control.

Pelley: Some people think the $600 billion is a terrible idea.

Bernanke: Well, I know some people think that but what they are doing is they're looking at some of the risks and uncertainties with doing this policy action but what I think they're not doing is looking at the risk of not acting.

Pelley: Many people believe that could be highly inflationary. That it's a dangerous thing to try.

Bernanke: Well, this fear of inflation, I think is way overstated. We've looked at it very, very carefully. We've analyzed it every which way. One myth that's out there is that what we're doing is printing money. We're not printing money. The amount of currency in circulation is not changing. The money supply is not changing in any significant way. What we're doing is lowing interest rates by buying Treasury securities. And by lowering interest rates, we hope to stimulate the economy to grow faster. So, the trick is to find the appropriate moment when to begin to unwind this policy. And that's what we're gonna do.

Pelley: Is keeping inflation in check less of a priority for the Federal Reserve now?

Bernanke: No, absolutely not. What we're trying to do is achieve a balance. We've been very, very clear that we will not allow inflation to rise above two percent or less.

Pelley: Can you act quickly enough to prevent inflation from getting out of control?

Bernanke: We could raise interest rates in 15 minutes if we have to. So, there really is no problem with raising rates, tightening monetary policy, slowing the economy, reducing inflation, at the appropriate time. Now, that time is not now.

Pelley: You have what degree of confidence in your ability to control this?

Bernanke: One hundred percent.

Pelley: Do you anticipate a scenario in which you would commit to more than $600 billion?

Bernanke: Oh, it's certainly possible. And again, it depends on the efficacy of the program. It depends on inflation. And finally it depends on how the economy looks.

Oh! I see! You think the less wealthy will spend a greater percentage of their income than will the more wealthy.

ican711nm wrote:

Oh! I see! You think the less wealthy will spend a greater percentage of their income than will the more wealthy.

I think you are on the right track... Politicians and liberal progressive democrats in particular have convinced themselves
and the dumbmasses that they (big government) do a better job of spending the money the people earn than the people can.
This gives the politician unlimited power over the people.

The Fair Tax Plan removes a great deal of this power from the politicians by allowing the people to keep all of the
money they earn. This loss of power scares the **** out of big government loving liberal progressive democrats.
Power to the people.

Any politician or political group who claims or implies that the Fair Tax
adds a 23 percent national consumption tax on top of all the other taxes
listed above is either lying to you or is ignorant of the facts.