Re: Krugman on the Deflation quagmire

[Warren Mosler <mosler@xxxxxxxxxxxxxx>]

Your answers are for a fixed exchange rate regime.

warren
--- Barry Brooks <barrybrooks@xxxxxxxxxxxxx> wrote:
> Concerning taxing those "least likely to spend."
>
> WARREN WROTE:
> > ...WHY
> > TAX SOMEONE IF IT WON'T REDUCE HIS SPENDING?
>
> One reason why is to put his surplus income back
> into the consumption
> economy and take it out of the investment economy.
> Maybe this could be seen
> as reducing his spending if bidding up the price of
> existing assets (usually
> confused with investing) is counted as spending.
> Such an investment in
> existing assets is not spending since it doesn't
> increase consumption, but
> it's good to reduce it because it's the basic cause
> of demand deficiency.
>
> >THE
> > VERY POINT OF TAXATION IS TO CREATE SELLERS OF
> REAL
> > GOODS AND SERVICES, ETC.
>
> Do you think that the point of taxation is to reduce
> spending or is it to
> create sellers?  If taxes are used for other
> purposes, to stimulate in the
> case of surplus income, that means that the point is
> other than the creation
> of sellers.
>
> Taxing surplus income creates buyers for what the
> sellers produced in the
> past which created the surplus income which we are
> taxing.
>
> Barry
>
>
>
>
>


=====
Warren Mosler, www.mosler.org
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