Monday, December 01, 2008


Economics is not my strong point and I don't understand the howling and wailing about the sky falling because the stock market has fallen to the same level is was about five years ago. Did I miss that last Depression?

Anyway, as far as "fixing" the problem goes the best commentary I've read on the matter comes from a post by Tam a few days ago.

Any money that the government "pumps into" the economy to "boost" it had to be pumped out of the economy in the form of taxes in the first place. Why is this so hard to understand? You can't raise the water level in a swimming pool by siphoning its contents from the deep end to the shallow end, nor can you build a wall higher by removing bricks from the bottom and putting them on top. Why is this extremely simple fact so terrifically difficult for otherwise smart people to grasp?

I notice that among the calls for a way to salvage the economy (both in the UK and the US) no one in power is talking about reducing their spending or slashing their budgets. They're all too happy to suggest injecting billions of pounds/dollars of taxpayers' money into various institutions but not so keen on actually cutting their own operating budget in any way, shape or form.

1 comment:

Ride Fast said...

Cut back on gov spending? Reduce taxes? Like the gov is some sort of parasite? What a refreshing concept.