Friday, January 27, 2012

The Ghost of Voodoo Economics

 Republican still push supply side economics.  Yesterday, the Washington Post ran this article: "Supply-side economics at core of Gingrich plan".  Supply side economics is Voodoo economics. It encourages people to recklessness consume before they have earned the money to buy products/services. That is one factor that caused the great economic meltdown in 2008.

Blame Bush was at fault by reducing the tax rate and reducing regulations that stimulated reckless growth. But guess what, after time you pay for that unwarranted stimulated consumption. People will only buy so many refrigerators, houses, cars, etc.. After a wile they STOP buying for a variety of reasons. They run out of credit, they have no need for that tenth car, they can no longer afford overpriced houses. The economy then tail spins. In the meantime, taxes have been cut. The deficit balloons out of control. Supply side economics works till the music stops. Economic devastation then occurs.

The purpose of taxation (with a few exceptions) is to provide revenue for Government operations. Tax policy should not be used to manage the economy

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