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Stimulating the Economy Print E-mail
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To stimulate the economy, create more value and consume more value. To destimulate, create less value and consume less value.

The economy is the total aggregate of value being exchanged.

To create value is to create a product or service that others value enough to exchange for sometime of value they created. Or invest in a person or business willing to create that value in exchange for a portion of the profit.

The more value you produce or help produce, the more you have to exchange for the value created by others, thus increasing the size of the economy.

The higher the return on investment (the ratio of the value of the effort and resources put in compared to the value of the end product or service), the more value that can be created and the faster the economy can/will grow. Higher taxes reduce the possible return on investment, and therefore will ALWAYS act as an inhibitor on the economy.

Government is almost always the least efficient in return on investment, compared to large and small businesses and private individuals. Value taken from individuals and businesses to be distributed through government agencies is a reduction in the overall efficiency of value creation.

Fear is an inhibitor because it decreases the willingness of people to risk investing in creating value because of possible loss, and decreases the willingness to spend all the value they create for fear they will not have future income and so must hoard and save.

When you understand these basic concepts, you will notice the huge mistakes our government has made and is continuing to make, and why our economy is tanking.

 

Some of the mistakes the Government has made so far (not necessarily in chronological order):

Destabilizing the confidence in banks by hiding which banks were borrowing how much from the Federal Reserve.

Destabilizing the confidence in banks financial security by forcing banks to lend to bad credit risk people.

Massively increasing government spending which has to lead to either super-inflation, massive tax increases, or both, and shifts money towards the least efficient means of value creation.

Promising an increase of taxes on the best value-generators, discouraging them from working hard to produce value, and in some cases driving them into "going John Galt" and aiming for producing only as much as they absolutely need to get by.

Dumping huge amounts of money on companies and unions making bad decisions instead of allowing them to fail and their resources to be put to better uses.

Promising tax increases that reduce the possible return on investment and discourage capital investment from everyone, leaving less money to help create new value and deepening and lengthening the economic problem.

Attacking coal and nuclear energy sources, increasing future energy costs and again reducing possible return on investment in all sectors.

If you voted democrat, you are one of the rain-drops that helped create this flood of mistakes.  Remember this fact as your bank accounts empty, your credit card fills, your retirement vanishes.

 

 
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