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October 30, 2008

Comments

reason

I've never found the argument convincing. The problem is incidence - nobody actually knows WHO will pay tomorrows taxes, and anyway there is the small issue of liquidity preference. And in a recession prices are lower, so it may make sense to buy now rather than later.

Matthew

I'm not sure you've expressed this very well. If poor people are getting by now, and the government announces a £100 tax rebate for every citizen, then of course they can save it. But isn't the point more that such people actually would optimally be in more debt than they are, i.e they would like to borrow in these bad times, and repay it in better times, but can't as they can't get access to funds. Thus the government doing it for them is correcting a market failure.

Don the libertarian Democrat

You might be interested in this about the Japanese stimulus plan from the FT:

http://www.ft.com/cms/s/0/00df00ae-a63c-11dd-9d26-000077b07658.html

"Although the handouts would increase household disposable income, given that there could be a consumption tax rise in three years, the plan was structured in a way that would encourage people to save, Mr Morita said."

Don the libertarian Democrat

If the rich save the money, and don't spend it helping the stimulus, why not tax their savings? In other words, give them a disincentive to save, and an incentive to spend or invest.

Don the libertarian Democrat

If the rich save the money, and don't spend it helping the stimulus, why not tax their savings? In other words, give them a disincentive to save, and an incentive to spend or invest.

James Young

Re "tax their savings". They already do, in so far as the total amount of credit is increased through fractional reserve banking.

Not to be confused with "inflation" or the price level.

Air Jordans

Enjoyed reading this and would rather examine my own life and see where I am.Thank you v much for sharing...

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