Posted on 02/05/2015 5:36:06 AM PST by thackney
...Some governments have moved already to shore up their revenues by raising gasoline taxes or cutting fuel subsidies. At the same time, falling oil costs have pumped up deflation fears across Europe and Japan, adding to the risk that consumers and businesses will hold back on spending and investment, dragging on growth.
China has raised fuel-consumption taxes by 50% since November. Gasoline prices have soared in Indonesia as the authorities eliminated subsidies altogether. High taxes in Japan mean pump prices have fallen only 15% in the past six months, compared with a 40% decline in the U.S. Taxes also blunt the fall in Europe: premium gasoline prices have fallen 29% in the U.K. and 32% in France.
Brazil has trimmed subsidies and raised taxes to shore up its deteriorating finances. As a result, some consumers there are paying an extra 7% or more at the pump than they did last week....
The risk of a deflationary mind-set among consumers and businesses has emerged as a major challenge in the eurozone and Japan, both of which are struggling to avoid falling back into recessions. Low or falling prices for goods and services can restrain consumer spending, deter business investment, cap wages and add to debt headaches....
The more oil prices lower inflation expectations in Europe and Japan, the less effective new central bank easy-money policies meant to spur growth will be, Mr. Kose said. “It will require more to deliver the same impact, and the impact will be less potent,” he said.
Both the IMF and the World Bank lowered their outlooks for growth in many major economies outside the U.S. last month...
In Italy, Japan, France, South Korea, China and other major oil importers, consumer confidence is waning,...
(Excerpt) Read more at wsj.com ...
Same with lower punitive taxation. / s
Those that don’t have to spend their gasoline savings on rising food prices would do well to take the extra money and pay off their credit cards. That is a big drain on most family finances. Paying off the credit cards is like giving yourself a raise.
Well then we should raise the cost of everything and have runaway inflation then. Then we can have hungry people highjacking cattle cars and slaughtering them on the road before the gendarme show up, just like in Argentina.
Sounds like the people of the world need to cast off the bonds of socialism and "right-size" their thieving governments.
In America it does. It may not make a difference in 3rd world rat holes and socialist countries.
All of the business school types are religious anti deflation priests. Even if a commodity falls from bubble highs it is still a bad thing. UFB.
It doesn’t lead to growth when the government uses it as an opportunity to jack up the gas tax.
Lower taxes and energy costs help the economy but it takes a while for the full effects to come into fruition -
especially when the tax cut is “temporary”.
1. The actual tax
2. The tax as a percent of income
Norway has the highest gasoline tax in the world and the highest price of gasoline in the world.
But, Norway is a very wealthy nation and they all have very high wages/income so if you measure the cost of that highly tax gasoline as a percent of their income, they have some of the cheapest gasoline in the world
OTOH, Egypt has very low taxes on gasoline so the price of gasoline is one of the cheapest in the world.
But, Egypt is a very poor nation with very low wages/income so the price of gasoline as a percent of income is some of the highest in the world.
As the article points, nations with high gasoline taxes are less impacted when the price of oil rises or falls while nations with low gasoline taxes are more impacted.
'Flation, in or de is and only is an increase or decrease in the supply of money. Keynesians and simpletons equate inflation with expansion because they believe in a zero sum economic model i.e. Wealth is a constant sum that has never changed since the first cavemen traded meat and berries. Expansion only occurs when more money is created in a national economy so that its goods and services become cheaper relative to other economies and the share of wealth in the inflating economy rises by sucking it out of the others.
That, to the Keynesian is "expansion" and "prosperity" for the inflating economy. Followers of this economics are inherently greedy and their economics is a simple begger-thy-neighbor model. More sophisticated Keynesians have forgotten why they wanted inflation in the first place and believe world prosperity requires ALL economies to be inflationary at the same "healthy" rate which they have generally settled on as 3%.
Inflation is preferred by governments because it is taking more of the total wealth of an economy for the government- taxation without passing a law or decree.
Saving is the worst evil to these people and causes the most hand-wringing and pumping up of inflation. Keynesians have no concept of how wealth is created. They don't understand Capital which is Savings. To these "economists" Capital, much as the word is thrown about, usually as a pejorative, is totally unnecessary because wealth can be neither created or destroyed; it is a constant sum.
Keynesians also believe that Inflation is Expansion because the numbers are bigger. Men with advanced university degrees in Economics who have distinguished careers working for the government and Universities teaching it all to others believe that.
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