Wednesday, January 14, 2009

Stimulus

I maintain that tax cuts are the most effective form of "stimulus". When the taxes of ordinary people are cut, they do one of the following:

1. Spend the money, which helps retail and manufacturing.
2. Save the money, which helps to increase the amount of capital available to banks.
3. Invest the money, which helps increase the amount of capital available to corporations.
4. Use the money to start a business, which helps create jobs.
5. Burn the money on the front lawn, which helps control inflation.

Right now, a lot of government projects are being proposed under the pretext of creating jobs. These projects must be justified on their own merits, otherwise it would be cheaper to simply provide the unemployed with food stamps.

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