Mosler's do ent is interesting, and something I've read a long time ago (thanks 2centsworth), but after letting it simmer for a while, I realized there are scenarios where neither tax cuts or spending increases necessarily can improve the economy as a whole, and in a way we're in that boat right now.
We literally have a federal tax rate of zero for almost half the population, but that still doesn't get the economy going. And the reason that specific people doesn't have enough money "to buy stuff in the big department store" (as Mosler would put it), is varied and complex. There's state taxation, there's wage considerations, there's private debt burden, etc. On the other hand, other part of the population is doing great (like banks, military contractors where government spends directly, etc).
So, there's an aspect of income distribution that undoes the basic principles outlined there. And it's difficult for the small group doing well to actually invest and produce when there's such a mul ude of those not doing well, and not having enough to purchase.
So we see a cycle where certain people get richer and richer, but sit on the cash, and those who don't have enough, remain that way. And looking at wealth movement and concentration the last few years, there's certainly some of that going on.
Reply With Quote
