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| Stimulus Plan Summary | |
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| Tweet Topic Started: Jan 25 2008, 11:50 AM (431 Views) | |
| STC | Jan 28 2008, 12:01 PM Post #16 |
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Commodore
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Both options (rebate, and tax cuts suggested by ABG) are a fiscal stimulus. Both come out of public finances, both lead to an increase in disposable income and consumption (depending on the marginal propensity to consume). Both will necessitate government borrowing if they are to act as a stimulus. No difference from that side of things. There is a difference in that the rebates appear to be a 'one-off' payment to add liquidity to the economy. Tax cuts would be a permanent commitment - adding more pressure to government borrowing. I thought that was what some people wanted to avoid? |
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| Admiralbill_gomec | Jan 28 2008, 12:59 PM Post #17 |
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UberAdmiral
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The current plan literally prints more money. This will further devalue the dollar. |
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| STC | Jan 28 2008, 01:21 PM Post #18 |
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Commodore
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That depends on how any increase in the government deficit is financed. Supposing it was financed by new money. Would a further devaluation of the dollar be such a bad thing? Would make U.S. exports more competitive, reducing the trade deficit and providing an injection (Export revenue increase) into the economy. The risk is that inflation would increase as a result of the falling dollar increasing import prices. But then, isn't the risk of doing this by a one-off tax rebate less than cutting income taxes, which is more likely to lead to a demand-led inflationary spiral. |
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| ImpulseEngine | Jan 29 2008, 04:13 PM Post #19 |
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Admiral
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Are you getting this just from the article because I don't see it there. If not, where do you know this from? I have been looking around the internet and can't find an answer to this question. |
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9:21 AM Jul 11