But that doesn't require higher marginal rates on some than on others. The tax rate is slope; the amount of money needed to live a reasonable life is intercept. Or to put it differently, we should tax people on their profit, not on their revenue.
Which is why we use a progressive income tax. To have low or no tax on the income that is needed to survive and progressively higher taxes on the amount above that. There is also a view that it is desirable for everyone even the poorest to pay some taxes to have a stake in the country. I would support this idea if we weren't doing everything possible to keep wages low to boost profits.
We all recognize it would be stupid to tax a supermarket that buys its inputs for $1,000,000 and sells food for $1,001,000 on its revenue rather than on its profit -- supermarkets' profit margins are paper thin and taking 21% of revenue would simply shut down the supermarkets.
But we do tax supermarkets on their sales. For some reason, it is called "Sales Tax." Go figure.
From the 21% figure I take it that someone has championed the Fair Tax which my Congressman Rob Woodall always files as HB1 or some other low number. Rob was picked as one of the five stupidest Congressmen based on an analysis of the written documents and speeches that he authors himself.
We almost voted him out of office in November, but he survived by a razor-thin margin of some hundreds (433) of votes out of the quarter million (280,453) that were cast. Well within the margin provided by the Kemp voter suppression machine. My wife's vote wasn't counted because when she registered to vote she spelled out her middle name and when she voted she signed with her middle initial.
Woodall went to the state GOP to see if they could help him as they have before by gerrymandering either more Republicans into the 7th district or more Democrats out of it. He was told no could do because they would endanger another Republican congressman. So he announced that he wouldn't run in 2020.
The fair tax can only be held at the 21% level if they collect it on every transaction in the country including the things that the government buys. Yes, the federal government would have to pay taxes to itself for everything that they buy. State governments would have to pay taxes for everything that they buy. Churches and other non-profits would have to pay too.
I did mention about one of the five stupidest congressmen, didn't I?
We let businesses write off legitimate business expenses -- the amount of money they have to spend to keep the taxable activity going at all. There's no reason but historical accident that we don't apply the same principle to people.
Reference: progressive taxation and standard deduction, among others.
So yes, of course people have to be left enough of their income to live on. (And frankly, the rule that your medical expenses have to run over 7.5% of your income before they're deductible is just asinine.)
It is 10% of your income now. I expect to have almost $100,000 in medical expenses for last year, mainly for drugs and to pay for my caregivers, I don't have a problem with paying this because the alternative for me is a nursing home at about 8,000 dollars a month which I want to avoid as long as I can stay in my own homes. However, I think that tying the deduction to the ability to pay would be reasonable. Many people in my situation don't have the resources that I do and have no option except Medicaid which is always under attack by the neoliberals who want more money to give the rich more tax cuts.
But to jump from that premise to the conclusion that a guy in the top 0.1% should be paying a higher marginal rate than you in the top 2% pay would be a complete non sequitur.
I think that the proposals vary from a marginal tax bracket of 70% for the income that is above from 4 to 10 million dollars a year. I don't earn anywhere near that much.
You misunderstood me. I said that even with my upper-middle-class income I believe that I should have to pay more taxes. Therefore I am not surprised that people who earn millions in a year feel like they should be paying more.
Neither of you is being taxed out of putting food on the table. The fact that it isn't discrimination to tax you more per dollar than an unemployed homeless guy doesn't change the fact that it is discrimination to tax Tom Cruise more per dollar than you and me.
I have read this over many times and I am still not sure what you are saying here. I can't tell why you think that progressive taxation is discrimination. You say that it is discrimination to tax Tom Cruise at a higher rate than I am taxed but not discrimination to tax me at a higher rate than a homeless guy. You might want to revisit this to make sure that this is what you wanted to say.
I don't see progressive taxation as being discriminatory. We need taxes to prevent runaway inflation. You have to tax people who have money, and the people who earn a lot of money are the ones who have to pay the most. This is also reasonable because they are the ones who are benefiting the most from society and who have the most to protect, the primary function of the government.
Doing a citizen's full share of societal upkeep isn't a hardship for any one of us.
I agree.
I don't know what earlier post you're referring to; but "growing income and wealth inequality" isn't a real thing, so whether it "damages the economy" is about as substantive a question as whether the virgin-stealing dragon is damaging the economy.
You say that "growing income and wealth inequality" isn't a real thing and then you post a chart that shows growing income inequality which naturally leads to growing wealth inequality. I feel like this growing into a discussion similar to one on climate change where up is down and in is out. You are better than this.
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below posted as post #167 - url -
https://talkfreethought.org/showthr...y-higher-taxes&p=653103&viewfull=1#post653103
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I am in the middle of a response to Bomb#20 commenting on one of my posts. My life keeps getting in the way of completing it, but the following might be interesting for others here and I know people usually aren't interested in my long wall of words responses.
Bomb#20's post said that income and wealth inequality isn't a real thing and cast doubt quite colorfully that it harms the economy.
I don't know what earlier post you're referring to; but "growing income and wealth inequality" isn't a real thing, so whether it "damages the economy" is about as substantive a question as whether the virgin-stealing dragon is damaging the economy.
That growing income inequality is bad for the economy is pretty much a settled issue among economists. Even the crazy Libertarian economists believe that it is. The crazy part is that they think that a genuinely free market for labor will correct the income and wealth inequality.
I sat down and tried to list all of the ways that income inequality is bad for the economy,
- the income and wealth inequality reduces economic and social mobility. The US is now among the worse in this regard of the developed countries.
- the stagnate wages have reduced the effective aggregate demand in the economy because the poor and the middle class have a higher propensity to spend their incomes while the rich have a higher propensity to save their incomes.
- saving, whether in a bank, the stock market, T-Bills or in a mattress, reduces growth in the economy because savings by definition is money not spent, money withdrawn from the economy. (And no, banks don't loan out deposits, banks create money and deposits when they make loans and paying back loans destroys money and deposits.)
- the rich chase higher returns for their savings inflating the stock markets and real estate property values.
- the increasing real estate values increase the housing costs of the non-rich, both rent and home ownership.
- the increasing stock values increase the pressure on the executives of corporations to increase profits to match the increased stock valuation, even though the corporation sees little gain from the increased stock valuation.
- the increase in housing costs further harms the non-rich whose wages have stagnated to increase the incomes of the rich.
- the stagnating wages of the non-rich means that they go into debt in an attempt to keep up their lifestyle in the face of the erosion of their salaries and wages.
- the inability of the rich to find what they consider to be adequate returns on their savings encourages the financial markets to invent securities which are little more than highly leveraged gambling bets like tranched sub-prime mortgages derivatives.
- this inability of the rich to obtain adequate returns on their savings meant that they put considerable pressure on the political establishment to open areas of the economy and the government to profit-making and capitalization that aren't suitable for the profit motive, areas like health care, education, and jurisprudence.
- the stagnating wages means that inflation was moderate because growth and economic activity were reduced.
- unfortunately, the moderating inflation wasn't recognized for what it was, reduced aggregate demand, it was taken as a result of improved economic management by the Fed of the economy, leaving them ill-prepared when the financial markets collapsed.
- rather than bailing out the victims they bailed out the perpetrators of the crimes.
- up to 85% of the increased profits and subsequent income gains of the wealthy was due to lower real wages, not innovation or some mysterious and unknowable structural change in the economy.
- this meant that corporations became indolent because they didn't have to work hard for their profits, as an example, productivity gains have flat-lined as a result.
- the return on the dollar from lobbying and advancing the careers of right-minded politicians is far greater than investing and working to improve products and productivity.
- the social tension resulting from the income inequality is certain to be finally noticed by the media, any day now.
- wage earners know that something is wrong, but they aren't sure what it is, they aren't progressing as their parents did, they aren't as economically secure as their parents were, they are always afraid of losing their jobs, everyone else seems to be looking out for only themselves, they are always in debt, and they are striking out in destructive ways like voting for Trump.
Only the moderating inflation was good for the economy, but even that backfired because it allowed economists at the Fed believe that it was because they were getting better at controlling inflation and the economy. Ben Bernanke in 2005 called it the "Great Moderation, where modern macroeconomic policy has decreased the volatility of the business cycle to the point that it should no longer be a central issue in economics," not the only time Bernanke was dead wrong.
The economists at the Fed were neoclassical synthesis economists, and they were neoliberals. Ben Bernanke as the chairman of the Fed toasted one of the founders of neoliberalism, Milton Friedman, telling him that thanks to him the nation wouldn't have to endure another depression. The date was July 31, 2006. Ben Bernanke had only slightly more than a year before he was proven so tragically wrong.
Ben was undone by both his neoclassical training and the neoliberal political economics of the Bush II administration. The neoliberals don't recognize any impacts of the income distribution, i.e. the consumption function*, on the economy. They didn't realize that the "Great Moderation" was a result not of their brilliant stewardship of the economy but because neoliberalism was directing more of the rewards from productivity and innovation gains to the upper class in profits where previously it was split 50/50 between profits and wages. And because the already rich are much more likely to save their money than the wage earners, the impact of those gains on the economy is substantially less than if half of it is paid in wages.
*
and Friedman's argument that people look to the national debt and save money for the day when they have to help pay it off is just too out of touch with reality to be believed.
What the Fed also didn't realize was that their ability to manage the economy was being eroded by the very income and wealth inequality that we are discussing here. The huge amount of money that was being shifted from wages to profits, from the poor and the middle class to the upper class had created a huge shadow banking system to loan money beyond the Fed's control. This huge amount of money far exceeded the amounts needed for investment. As a result conditions were ripe for Wall Street to invent creative ways for them to get their hands on as much of the money as possible.
Coupled with the changes in the laws and regulations that loosen the controls over the banks that the neoliberal Gingrich pushed through Congress and the neoliberal Clinton signed killed local banking and allowed the formation of the huge national banks, the banks that were too big to fail. By the time the Great Recession started just five of these large banks divided about 70% of the nation's banking business between them.
Neoliberalism also blinded them to what was the root cause of the Great Recession. The FBI and the SEC warned Congress and the Fed that the large banks were committing the same types of frauds that the Savings and Loans committed in the 1980's after they were deregulated.
The big banks and the investment banks were selling derivatives made up of mortgages for private homes. They were bundling these mortgages and taking slices across the bundle, called tranches so that every slice contained only a fraction of any one single mortgage. Thus a single default wouldn't impact any slice badly. And they were correct up to a point. And besides, they could turn around and sell off the foreclosed home and recoup most if not all of the money lost. Once again, they were right up to a point. And the point where they stopped being right depended on the widespread, misplaced belief that home prices never go down. Home prices do go down when millions of families default on their mortgages when the interest rates increase, and banks try to sell all of the homes that they foreclosed on.
These derivatives were touted as rock solid, no loss investments. It comes as no surprise that the most popular ones were those composed of sub-prime mortgages since those paid the most interest. To meet this demand, the underwriters told the mortgage brokers that they would pay a premium for sub-prime mortgages.
As the traditional mortgage brokers were unable or unwilling to provide enough sub-prime mortgages the underwriting banks and investment firms brought in the Country Time and the American Home Mortgage predatory lender level of mortgage brokers to fill the demand. A predatory lender is someone who makes a loan with the anticipation and the hope that the borrower won't be able to pay the loan back and will default on the loan.
(This is not the same as red lining and the anti-redlining laws and regulations which didn't force the banks to make these loans to under-qualified minorities, that some here have claimed. The CRA didn't cause the Great Recession, the CRA was a forty-year-old law that said if you are a bank and you take in deposits from a minority-dominated area previously subjected to red-lining you have to write mortgages in the area worth at least one-half of the amount of deposits the bank has from the area. It specifically prohibits you from the requirements if in your judgment you can't find enough qualified borrowers to fulfill the requirements of the law. It isn't even considered to be a civil rights act because the vast majority of the banks that it covered were, of course, minority-owned.
These minority-owned banks had been loaning money in the suburbs not because they were racists but because it is more profitable to make one $200,000 mortgage loan than it is to write four $50,000 loans and the homes in the suburbs were worth more.)
Of course, since the mortgages were adjustable, back-end loaded, i.e., the mortgages came with reduced interest rates for the few years and then the interest rates jumped or there was a catchup balloon payment, the derivatives were leveraged to pay a return as if the homeowner was already paying the higher interest rate. Few people who bought these instruments realized that they were taking out a loan that would reduce the cash out value of the derivative if it was redeemed before the loan built into the derivative was paid off.
Unbridled capitalism at its best! What could go wrong?
Alan Greenspan was in charge of the Fed for most of the lead up to the Great Recession. He was a true believer in neoliberalism who introduced Ayn Rand to Ricard Nixon. Greenspan told the congressional investigators that he didn't follow the advice of the FBI and the SEC to clamp down on the banks because he thought that the banks and Wall Street had learned how to self-regulate.
How was this similar to the previous deregulation disaster of Reagan's savings and loan crisis? Because in both the executives of the financial institution's browbeat accountants, bond rating agencies, adjusters, auditors, property appraisers, partner banks, etc. to give their financial instruments and the underlying mortgages higher marks than they deserved.
Well, no, that reason isn't at all easy to understand. That reason looks for all the world like mush-headed folk-economics, blatantly disconnected from reality. Of course, it matters how you save it. When you save money in bank accounts, the banks pay you interest. Think about that for a minute. They're doing you the services of keeping track of your money for you, keeping it safe from thieves for you, and delivering it to anybody you tell them to for you, and they pay you! In any normal world, like the world before modern economies, you'd pay them for all those services. For them to pay you is as nutty as if you shot a guy in the face with a shotgun and he apologized to you.
So why do you think a bank does that?
The banks do that so that the government allows them to do what in essence makes them a bank, the ability to create money out of thin air to loan out and on which to charge interest.
When you loan money to your good for nothing son-in-law the money goes from your account into his. Even under reserve banking when the bank loans you money they create the entire loan amount and deposit it in your account. They do it by typing the amount into a computer. That and double entry bookkeeping is all there is to it. The loan is your liability and the bank's asset. If you default on the loan it becomes the bank's liability to collect from you. If you pay the loan off the money that the bank created for the is destroyed.
Magnanimity? It's owner feels charitable toward all these people laying off their responsibilities on her? Obviously not. The bank pays you because the owner wants to borrow your money from you, and she wants to give you a reason to lend it to her instead of to someone else, because she's going to make a profit on having your money for a while. How is having your money for a while going to make more money for her? Simple: the banker's going to re-lend your money to someone else, and she's going to charge him a higher interest rate than she'll be paying you.
No, the money that you and deposit in the bankis still there. When you loaned the money to your good for nothing son-in-law did the bank refuse to give him the money because it had been loaned to some else? Have you ever had that experience? I didn't think so.
So let's think about this guy, whoever he is, who's willing to pay the banker a bunch of money in exchange for the privilege of getting to have your money for a while. Why is he willing to do that? What's in it for him? Does he like green, aesthetically? Does he get off on rolling around in a bathtub full of dollars? No, of course not. He wants to borrow that money because, let's all say it together, <drumroll please>
he's going to spend it.
And when he spends it,
it's going to pay for products or services that will pay someone else's wages, and it will encourage businesses to invest in their own business to make more profits. Q.E.D.
Yes, the borrowers are going to spend it. What happens to your explanation if the demand for loans exceeds the total amount of deposits? Has it ever happened that the banks ran out of deposits?
Think about the whole economy. You are saying that all of the private debt in the nation, all of the home loans, car loans, student loans, business loans, credit card debt, etc. has to be less than the total amount of deposits in the economy.
What you discribed is 100% reserve banking and it has been tried. It didn't work well. The farmers needed credit to buy seed late in the winter to be able to plant in the spring. They had to wait for deposits to build up to get enough credit to buy seed. Bankers had to refuse loans to consumers and businesses so that there would be enough credit so the farmers would have enough to buy seed and the nation would have food to eat. The capitalist economy doesn't work well in these conditions. Capitalism's strength comes from its decentralized millions of small, easy to make decisions combining to direct the economy. Asking bankers to decide how much food the nation will need next year is a big and hard decision for them to make.
If you don't understand how "fractional reserve banking" works Google it and read. Here is one, the first link found by googling
does fractional reserve banking create money?"
Because banks are only required to keep a fraction of their deposits in reserve and may loan out the rest, banks are able to create money.
FRB increases the amount of loans that can be written with a limited amount of deposits. This is what we want. Then the farmers, the consumers, and the businesses don't have to wait for credit, and the bankers don't have to make the decisions on how much food the nation needs.
What also important is what they don't say, which is from where does the money created come?
Here is a more explicit admission by the
Deusche Bundes Bank the German Central Bank, effectively the Fed for the entire European community.
Book money created only by transactions between banks and non-banks
In terms of volume, the majority of the money supply is made up of book money, which is created through transactions between banks and domestic customers. Sight deposits are an example of book money: sight deposits are created when a bank settles transactions with a customer, ie it grants a credit, say, or purchases an asset and credits the corresponding amount to the customer's bank account in return. This means that banks can create book money just by making an accounting entry: according to the Bundesbank's economists, "this refutes a popular misconception that banks act simply as intermediaries at the time of lending – ie that banks can only grant credit using funds placed with them previously as deposits by other customers". By the same token, excess central bank reserves are not a necessary precondition for a bank to grant credit (and thus create money).
"Book money" is a direct literal translation, from the German
Geldbuchen. A better translation would be "Bank Money." Or what is deliriously called "fiat money" by those who wish that we would go back to the gold standard and 100% reserve banking and artificially constrained credit, the delusional.
It is hard to face how money is created which is out of thin air. This is hard for economists to do. This was hard for me to do. It goes against common sense, and what we have been taught in schools, it goes against what 90% of the economists believe. Paul Krugman, the liberal columnist for the New York Times and winner of the Nobel prize in economics, still doesn't accept it. He insists on his IS-LM Hicks diagrams and "loanable funds" theory.
I think that it is reasonable to say that this is on purpose, that the banks and the economists don't want it to be widely known that money is created by a bank typing numbers into a computer. That somehow it would undermine the value of the dollar which is after all determined by what it can buy and is guaranteed to have value by the US government requiring us to use dollars to pay our taxes.
It would be a corollary to why politicians and economists lie about the danger from the national debt and why it is debt that our grandchildren will have to pay. It isn't dangerous nor will our grandchildren have to pay it off. The biggest danger from it would be if we tried to pay it down or even if we paid it off completely. Because the only other way for money creation is for the federal government to run a budget deficit and to spend the money into the economy, and the only way that the national debt could be paid off would be by the government destroying the money created by the budget deficits.
No. The paradox of thrift applies to money sewn into a mattress. It demonstrably does not apply to money saved in an interest-bearing bank account. A parallel argument shows it likewise doesn't apply to money saved in the stock market.
No, the answer to whether the money saved in a bank somehow impacts the economy is answered above in my normal, excessive wordiness. It doesn't "somehow sneak out eventually" as someone here put it.
The money put into the stock market also is withdrawn from the economy. The corporation doesn't see any gain from its stock valuation going up. Any profit made on the sale of stock comes not from the corporation, but rather from the person who bought the stock. To the corporation, its stock is a liability claiming against its assets, even the reserve stock that the company holds.
You can even argue that it has little or nothing to gain from an increase in their stock valuation. The sole purpose of a corporation isn't to increase its stock valuation, and to make profits for its stockholders. The executives have many more obligations than this. They have obligations to their customers, employees, sub-suppliers and to the communities that they operate in up to the nation. Corporations have become people too, but people without the obligations of citizenship which in effect leaves them stateless. This is very dangerous.
Illustrative that the prime obligation of the executives of a corporation isn't just to increase the corporation's stock valuation is that the boards of directors have to pay executives with stock options and tie the executives' bonuses to the stock price. You didn't think that the board of directors would give this money to the executives if the executives were working as hard as possible to raise the stock prices without those incentives, do you?
The only gain that I see for a company from the stock going up would be if the reserve stock were sold off, they issue new stock, or if the reserve stock was used to buy a company. But selling reserve or new stock on the market is a secondary equity offering and is taken as a sign that a company is in trouble because secondary equity offerings dilute the value of the stock. And if it is used to buy another corporation, it can be viewed in most cases as buying an over-valued company with the buyers' over-valued stock and at best a wash.
If you have any explanation of how the money from the stock market gets into the economy, please tell us. Some here have suggested that venture capitalism is one way. I agree that venture capital does reward innovation and the innovators and that is a good thing. IPO's do the same. But the total amount of these two each year is less than a drop in the bucket compared to the yearly volume in the stock market. And the sum of the two is only about 10% of the annual corporate investment.
IPO's don't fund innovation but they do reward it. Even venture capitalists will only fund new businesses whose core is protected by patents.
If the rich do put their extra money into buying corporate bonds then they are loaning the money to a corporation, like you loaning money to your good for nothing son-in-law. It will be spent, and it will impact the economy.
(Whether it applies to T-Bills is a more complicated question since the feds have the option of printing money.)
Here you are getting close to the answer. Except it isn't the feds printing the money. Up to 95% of the money in circulation at any one time is bank created money. The government charters banks allowing them to create money out of thin air to loan to people with a reasonable expectation that the borrower can pay the loan back. If the borrower does pay back the loan the money created by the loan is destroyed. In this way the money that was created by the loan was temporary.
The feds create money when they run a budget deficit and spend it into the economy, as I said previously. This is permanent money in the economy because the federal government can't pay off the national debt without destroying 22 trillion dollars of money and savings.
The national debt also includes the current account deficit which consists of the trade deficit and financial capital flows as we invest in foreign countries and they invest in the US, which is usually a small surplus in our favor. What we use to call our balance of payments. This makes sense when you think about it, a current account deficit means that that amount of money is leaving our economy and the federal government has to create bonds to use to buy back this money from the foreign governments that run surpluses with the US when we settle our overseas accounts.
[And there is a difference in how the rich make this decision whether to spend or to save their income, <rest snipped since it proceeds from a false premise>
Why is this in your mind a false premise? It is based on the simple, observable fact that the rich save more of their income than everyone else.
You don't think that the rich save more of their income than everyone else does? This phenomenon comes from the simple fact that everyone else has to spend a greater part of their income to live. You don't believe that this true?
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I am not trying to demean you or your intelligence or your education or your political leanings, whatever they are. It is very hard to understand this when you have been taught otherwise and when what you were taught supports your ideology and your politics.
But this is the reality of the economy and any political ideology based on any other belief in how the economy works is not valid. This includes the political economics that underpins today's economic policies.
The academic economics of today hasn't served us very well. There are a lot of academic economists who understand this as I presented it above. But their ability to get published in the mainstream economics journals is blocked, and more importantly, they have a problem getting their research funded. The already rich fund almost all of the economic research and they prefer to fund research that enriches them.
Look at how our economic policies would change if just the lessons from viewing money realistically were applied.
- The economy is not a zero-sum game. Gains by one doesn't come at the costs of others.
- The economy expands to accommodate growth in population or new economic activity because of innovation or productivity.
- The government can create money out of thin air and they charter banks to do the same to make the loans that the economy needs.
- The government therefore doesn't collect taxes to have money to spend, they tax to give value to the money and most importantly to prevent inflation that devalues the money.
- The advantage of bank created money is that it means that the money supply grows or contracts along with the economic activity.
- The disadvantage of bank created money is that it results from an increase in private debt.
- The national debt isn't a problem; it is the private savings of
individuals and businesses.
- We can't pay off the national debt because attempts to do would destroy the money created by the debt and the private savings that it represents, throwing us into deflation and a depression, reducing the economic activity needed to generate the budget surplus needed to pay off the debt.
- Private debt is much more dangerous to the economy than the national debt.
- This is because private debt makes individuals and businesses reluctant or incapable of borrowing more to spend and the economy is unstable and more likely to go into a recession.
- When the economy is in a recession or coming out of one large amounts of private debt make the recovery last longer.
- For more than forty years wages for the poor and the middle class have been stagnate resulting in large increases in private debt.
- As noted elsewhere our current policies to favor the rich by directing as much income to them as possible and granting them generous tax cuts have dramatically increased housing costs and public college costs.
- Most importantly a rational view of what money is and its relationship to debt means we are not constrained by the lack of money to fully employ our resources and the available labor to have what we need as long as it doesn't cause inflation.
- We can stay away from damaging inflation by only spending the money into the economy from a budget deficit that paces real growth in the economy.
- The best way to fight inflation isn't as we do it now by increasing the interest rates but by raising taxes.
- It has to be a payroll tax on wages not a income tax, one that the Fed can not only increase but can increase the withholding, to give it more immediate impact.
- Corporations would be less likely to keep increasing prices if the result was an increase in their payroll tax.
- We are avoiding inflation now, but the problem is that all of the rewards from the economy's growth is currently going to the already rich and none is going to increased wages of the poor and the middle class.
- This restricts growth because it reduces the demand in the economy and increases private debt.
- We can increase the amount of growth in the economy by increasing the amount of the real growth that goes toward the wages of the non-rich, the current small growth in wages goes mainly to high earners.
- Wall Street and the rest of the financial sector are inherently unstable and they will never learn to "self-regulate" as Greenspan and the other neoliberals hope, they must be regulated by the federal government.
- This is because there are are always people who can make money out of the chaos of financial crises and we have to let them and to reward them for their bad behavior as a first step to recover from the chaos.
- We can see why it is undesirable to allow banks to combine consumer banking with investment banking, because they can create money out of thin air to use to speculate.
Just a thought but a really good way to start would be increase the minimum wage and to increase Social Security payments to those who qualified for less than the maximum because their wages were being intentionally suppressed to boost profits. These two items alone would go a long way toward eliminating poverty and putting the economy to work for everyone, not just the already wealthy.
Golden_Rule_savings_rate if economic growth is the goal.
