Professor Depew carefully poured over a long 35 page CBO PDF on Fiscal Stimulus.
image.minyanville.com/assets/FCK_Aug2007/...Econ_Stimulus.pdf
Thanks Kevin! This is what Kevin found:
In the CBO report was this vital recognition as it relates to fiscal stimulus targeting consumers:
"In general, tax cuts or increases in transfer payments from the government to people (such as Food Stamps or unemployment insurance benefits) increase household demand by providing consumers with additional spending power."
True, but here's the recognition and caveat from CBO:
"But households do not predictably spend a fixed proportion of the extra income left in their hands when taxes are reduced or transfers are increased. Rather, a household’s propensity to consume appears to vary with its income and depends on expectations of the household of what will happen to that income over the longer term."
In other words, you can lead a horse to credit, but you can't make it consume. That is why the combination of both monetary and fiscal stimulus will inevitably lose out in a deflationary credit contraction and unwinding of debt. gefunden bei Mish
globaleconomicanalysis.blogspot.com/2008/...oomed-to-fail.html
image.minyanville.com/assets/FCK_Aug2007/...Econ_Stimulus.pdf
Thanks Kevin! This is what Kevin found:
In the CBO report was this vital recognition as it relates to fiscal stimulus targeting consumers:
"In general, tax cuts or increases in transfer payments from the government to people (such as Food Stamps or unemployment insurance benefits) increase household demand by providing consumers with additional spending power."
True, but here's the recognition and caveat from CBO:
"But households do not predictably spend a fixed proportion of the extra income left in their hands when taxes are reduced or transfers are increased. Rather, a household’s propensity to consume appears to vary with its income and depends on expectations of the household of what will happen to that income over the longer term."
In other words, you can lead a horse to credit, but you can't make it consume. That is why the combination of both monetary and fiscal stimulus will inevitably lose out in a deflationary credit contraction and unwinding of debt. gefunden bei Mish
globaleconomicanalysis.blogspot.com/2008/...oomed-to-fail.html
