Re: Krugman on the Deflation quagmire

[Warren Mosler <mosler@xxxxxxxxxxxxxx>]

--- David Gleicher <104201.2301@xxxxxxxxxxxxxx> wrote:
> Message text written by
> INTERNET:pkt@xxxxxxxxxxxxxxxx
> >THIS IS ABSOLUTELY TRUE, BUT BEGS THE QUESTION, WHY
> TAX SOMEONE IF IT WON'T REDUCE HIS SPENDING?  THE
> VERY POINT OF TAXATION IS TO CREATE SELLERS OF REAL
> GOODS AND SERVICES, ETC. SO THE AXE SWINGS BOTH
> WAYS.
> TAXING SOMEONE WHO WASN'T GOING TO SPEND THE FUNDS
> DOES NOTHING FOR GOVERNMENT OR THE ECONOMY THE SAME
> AS
> CUTTING TAXES FOR SOMEONE WHO WON'T INCREASE
> SPENDING
> DOES THE SAME NOTHING.
>
> WARREN
> <
>
> I don't get this.  The flip side of why cut
> someone's tax if they're not
> going to increase spending (effective demand) is why
> not(!)
SHOULD BE 'WHY' RATHER THAN 'WHY NOT' AS ABOVE.

 increase the
> tax if its not going to decrease spending.

MY QUESTION IMPLIED, WHY INCREASE THE TAX IF IT ISN'T
GOING TO DECREASE SPENDING?  IT DOES NOTHING FOR THE
GOVT OR THE ECONOMY, APART FROM GETTING THE TAX PAYER
ANGRY AND WASTING ACCOUNTING TIME, ETC.

 Both in
> terms of the
> individual's immediate welfare (which is not
> reduced) and effective demand
> (which is increased, assuming the tax is itself
> spent)

THE QUESTION WAS REGARDING THE CASE OF TAX INCREASES
OR DECREASES NOT ALTERING EFFECTIVE DEMAND.

WARREN

 this would seem a
> win-win Keynesian employment policy.
>
> DG
>
>


=====
Warren Mosler, www.mosler.org
c/o James River Capital Corp
5007 Chandler's Wharf, Suite 201/202
Christiansted, USVI  00820
340-719-8813 office phone
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Primary email contact:  mosler@xxxxxxxxxxxxxx

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