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To: Tallguy

Disagree -- tax cuts are inherently anti-inflationary. They do not increase the money supply - they simply transfer resources from the wasteful, inefficient public sector to the much less wasteful, much more efficient and productive private sector. Thus tax cuts make the economy more efficient. The text book definition of efficiency says it is increased when outputs from a system (in this case, our economy) are increased relative to the inputs. As you noted, inflation is defined as too many dollars chasing too few goods and services. Tax cuts increase the outputs of the economy and thus are a perfect policy response to the problem of inflation.


188 posted on 01/13/2007 4:34:39 PM PST by WarrenC
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To: WarrenC
As you noted, inflation is defined as too many dollars chasing too few goods and services.

I'm surprised nobody has mentioned the government printing presses . . .

The classic short route to massive inflation has always been printing money without anything solid to back it up. (As in the American Revolution, the Confederacy, South American banana republics, and most recently the attempts by certain rogue nations to flood the U.S. with counterfeit currency to cause inflation.)

This was explained in easy-to-understand terms by Milton Friedman in his television series "Free to Choose" and book by the same title.

His writings, by the way, not only influenced Ronald Reagan and Maggie Thatcher, they were circulated underground behind the Iron Curtain before it fell in 1989.

197 posted on 01/13/2007 7:40:49 PM PST by Liberty Wins (Life, Liberty, and the pursuit of all who threaten it.)
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To: WarrenC
Disagree -- tax cuts are inherently anti-inflationary.

If you pump dollars into a economy without killing the underlying inflationary pressures you just get more inflation. Period. If Reagan's tax cuts had been instituted in 1973 we'd have had a 20% plus inflation rate instantly.

223 posted on 01/14/2007 10:05:13 AM PST by Tallguy
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