Trickle down

RYAN By Guest Blogger Ryan Lewenza

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Today I’m going to cover the controversial economic theory know as trickle-down economics. I can hear the yawns already so go top-up your coffees.

For macroeconomic theory there are two main schools of thoughts. First is demand-side economics, which was popularized by US economist John Maynard Keynes. This theory posits that economic growth is driven by stimulating demand for products and services. For example, if an economy is slowing/contracting the government should increase spending (i.e. demand), which can help stimulate the economy.

The second theory is supply-side economics, which argues that increased production drives economic growth (see chart below). To help increase production governments should promote a business friendly environment by cutting taxes and regulations.

How Supply-Side Economics Works

Source: Investopedia

Trickle-down economics is a form of supply-side economics and supporters of this theory believe that targeted tax cuts for corporations and the wealthy will help to stimulate economic growth and ‘trickle down’ to the rest of society. This school of thought was advanced by Ronald Regan in the 80s, economists like Art Laffer, Bush II in the 2000s, and more recently by President Trump and the Republican party when they cut corporate and personal tax rates in 2018.

It’s my personal view that trickle-down economics is not very effective at stimulating long-term economic growth and, in fact, can have negative long-term consequences for an economy. Let me explain.

First, as is common with many economic theories, the theoretical premise of trickle-down economics doesn’t really work in real life, or the actual gains end up being far less than anticipated.

The father of trickle-down economics is economist Art Laffer. He believes that when taxes are high this provides a disincentive to work and make investments. Therefore, the government should lower taxes to stimulate the economy and that the stronger economic growth will result in higher government tax revenue thus the tax cuts ‘paying for themselves’. The problem with this is that it only works when tax rates are prohibitive (i.e. above 50%). Currently the highest marginal tax rate in the US is 37%, so given this, trickle-down economics is less effective than in say the 1930s when it was in the 60% range.

Let’s examine the most recent example of trickle-down economics – Trump’s tax cuts from 2018. President Trump, his economic council, and the Republican congress all said that by cutting the corporate tax rate that: 1) it will stimulate the economy so much that the US economy will grow 3-4%, and 2) the tax cuts will pay for themselves as a result of higher economic growth.

How did this pan out? Let’s review the chart of US GDP below.

The tax cut was implemented in Q1/18 and you can see there were a few decent quarters of growth following the tax cuts but this has since faded (last quarter growth was a lackluster 1.9% Q/Q). I calculated an average of quarterly GDP growth (blue line) to smooth out the trend and clearly growth has been decelerating since early 2018. Yes there are other factors at play that are weighing on the economy (e.g. Trump’s trade war) but, as you can see, the high growth predictions have fallen far short.

And we can do the same exercise looking back at Bush II tax cuts in 2000 and others and see the same effect. The net result is usually a short-term bounce in growth, but the targeted tax cuts often don’t have any long-lasting positive effect.

US Economy Has Slowed Since the Tax Cut in 2018

Source: Bloomberg, Turner Investments

My second concern with trickle-down economics brings in another economic theory called ‘the marginal propensity to consume (MPC)’. Essentially, this theory tries to quantify how much people will spend if they receive higher income. The MPC tends to be higher for lower income levels, meaning that if a person earning $50,000/year receives a $1,000 bonus they are more likely to spend the $1,000 than someone earning say $200,000/year. Taken to the extreme how many yachts can Jeff Bezos buy if his tax rate is lowered? The MPC theory suggests lowering taxes on lower income levels will have a larger impact on the overall economy than cutting taxes on higher income earners.

Third, is the impact on government tax revenues and deficits. This is my big beef with trickle-down economics. Over and over again we hear ‘the tax cuts will pay for themselves’, however, the reality is far different. It’s real simple. Due to the lower tax rates and the lower-than-predicted economic growth rates, government tax revenues decline and deficits often spiral. This is exactly what we’re seeing in the US right now. The US deficit is going to hit US$1 trillion this year, and this is during a period of positive economic growth. Just imagine what it will look like during the next downturn.

US Deficit to Hit $1 Trillion This Year

Source: Bloomberg, Turner Investments

Finally, a strong argument could be made that trickle-down economics has contributed to the rising income inequality that we’ve seen over the last few decades. For example, the top 1% earners currently take home 21% of all income earned in the US versus 10% in the early 1980s. I believe this is contributing to much of the angst and polarization we are seeing in the US and the rise in populism.

So there you have it. I’ve laid out my concerns with trickle-down economics and why I’m not a proponent of this economic theory. Now to be clear, I’m not advocating we fleece the wealthy à la Senator Warren and recommending tax cuts just for lower income individuals. This is basically our PM’s current approach. Instead I believe that tax rates are too high for all Canadians, and that personal tax rates should be lowered across the board. For example, currently the highest marginal tax rate for Ontario residents is 53%, and like Art Laffer, I believe that when tax rates are this high it does provide a disincentive to working and investing. But where I diverge is that cutting tax rates just for the wealthy and corporations that it’s unlikely to ‘trickle down’ and lead to prosperity for everyone as they profess it will.

Ryan Lewenza, CFA, CMT is a Partner and Portfolio Manager with Turner Investments, and a Senior Vice President, Private Client Group, of Raymond James Ltd.

 

83 comments ↓

#1 Robbie on 11.09.19 at 3:15 pm

Well said!

#2 Sold Out on 11.09.19 at 3:29 pm

So, the 40% of Canadians that pay no net taxes (that Garth is always bashing) are actually instrumental in goosing the consumer economy and achieving all those sweet divys and cap gains that keep investors happy? I see no problem here. Win/win is always the most desirable outcome.

#3 Shawn Allen on 11.09.19 at 3:31 pm

Well said and I agree 100 percent.

#4 Stan Brooks on 11.09.19 at 3:49 pm

Supply side economics was hugely successful in the Reagan era in:

1. Increasing investments and improving competitiveness.

2. Increasing consumption.

3. Creating growth and reducing inflation by taking on PUBLIC debt.


In the 1980s, President Ronald Reagan used supply-side theory to combat stagflation that followed the recession in the early part of the decade. Reagan’s fiscal policy, also known as Reaganomics, focused on tax cuts, decreased social spending, and the deregulation of domestic markets. Reagan’s supply-side fiscal policy saw positive results with the inflation rate reduced to 4%, the unemployment rate reduced to 6%, and average annual gross domestic product (GDP) growth of 3.51%. In 1984, GDP under the Reagan Administration increased 7.20% for a record post-1980 high.

Note: the above measures is real inflation/unemployment, not the currently bastardized and having nothing to do with the reality measures.

+ you are forgetting MMT – the modern monetary theory where government simply prints money to cover the deficits/public debt.

The banks might not like it but it is coming.

+ the example of cutting only the highest marginal rates is strange, why not cut taxes across all tax rates?

Also increase the interest rates to the real inflation rates in order to protect savers.

———————————–

To summarize: this article is mostly cherry picking and touches only on some characteristics of the key economics theories, and that at very high level.

We understand that the banks profits have to be protected at all cost but don’t you think they already got their fair share of the pie?

We risk everything by staying on this same path of lying about inflation and stagflation while going deeper in personal debt with economy stagnating.

How exactly do you see us going forward and what will keep triggering ‘growth’ (read consumption) that our debt based system desperately needs? More personal debt?

How long more do you think we can tolerate inflation of 6-8 % while rates are at zero?

#5 Stan Brooks on 11.09.19 at 3:56 pm

Instead I believe that tax rates are too high for all Canadians, and that personal tax rates should be lowered across the board

Agree.

#6 Azashi on 11.09.19 at 4:05 pm

Oh Ryan,

Now Garth is going to unfriend you on Facebook.

#7 Tim on 11.09.19 at 4:11 pm

The White House and Republican forecasts that tax cuts would lead to long-term higher growth and pay for themselves in terms of federal revenue were widely discredited at the time, but the administration went ahead anyway, claiming their own (outlier) forecasts would be the accurate ones.

The University of Chicago’s Booth School of Business regularly surveys top economists on issues of the day. These are Nobel laureates and other serious scholars that have studied these issues for decades.

Back in 2017, of the 42 economists polled, 1 of 42 expected that the tax cuts boost the economy long-term.

Zero of 42 thought the cuts in taxes would pay for themselves and they all predicted higher government deficits would be the actual result. (See http://www.igmchicago.org/surveys/tax-reform-2 for the data, participants and their individual comments.)

And now, two years of actual data is proving correct what the actual experts overwhelmingly forecast: a brief sugar high of GDP growth followed by a return to previous levels paired with rapidly growing deficits.

I’m grateful that in Canada, governance is much more based on actual evidence and policy expertise.

#8 Oscar on 11.09.19 at 4:21 pm

Well said Ryan and I completely agree! I see a similar effect in corporate tax cuts that, for the most part, simply result in increased share buy-backs which drives up share prices resulting in increased executive pay.

#9 I’m stupid on 11.09.19 at 4:21 pm

Nice post Ryan. What is the impact of lower interest rates as contributing factor of the wealth gap? I suspect having negative (real return) interest rates encourages more spending from the bottom of the income scale. What are your thoughts?

#10 Alberta Ed on 11.09.19 at 4:22 pm

Actually, I think the photo depicts the T2 government’s attitude toward taxpayers.

#11 Jay Currie on 11.09.19 at 4:42 pm

The concept of trickle down economics may work assuming that tax cuts go to the majority of taxpayers. The 1%, as you point out, have already consumed pretty much as much as they are going to. What you want is a tax cut which releases the consumption of the broad middle class.

The problem with that is that it is expensive in terms of tax revenue foregone. So it either increases budget deficit or requires a reduction in government activity. Now, the hope is that the middle class will march out and buy stuff and that this will increase economic activity and thereby tax revenue. The problem with that notion is that the middle class, in many cases, is deeply in debt and will use any additional income to pay down debt rather than consume.

There is a perfectly reasonable argument to be made that to stimulate economic activity you need to get more money into the hands of people who are too poor to pay taxes. This can be done by increasing things like pensions, welfare payments and cash credits. It can also be done by spending on big infrastructure projects or on social goods like potable water on First Nations Reserves.

Regardless of how government stimulates the economy, it also has to recognize that the “business and investment climate” matters. Stimulating a healthy economy will tend to increase GDP and with it tax revenue. In a country like Canada developing a healthy economy is, to a large degree, about balance and letting the market pick the winners and the losers.

#12 Robbed on 11.09.19 at 4:43 pm

Great explanation. What about the hidden tax….inflation? Or a currency that has no buying power,
outside where it’s distributed.

#13 Linda on 11.09.19 at 4:50 pm

Excellent post, Ryan. I’ve always wondered why folks believed that trickle down theory, given how many well publicized corporate tax cuts & bail outs which were going to ‘save jobs’ were followed by corporations either laying off workers, departing Canada for more ‘favorable’ tax climes or closing shop entirely.

#14 BlogDog123 on 11.09.19 at 4:50 pm

Whenever I hear “Trickle Down Economics”, it reminds me of this Ted Rall cartoon:

“Trickle Down Killonomics”

https://www.gocomics.com/ted-rall/2003/03/03

#15 Ryan Lewenza on 11.09.19 at 5:07 pm

Stan Brooks “In the 1980s, President Ronald Reagan used supply-side theory to combat stagflation that followed the recession in the early part of the decade. Reagan’s fiscal policy, also known as Reaganomics, focused on tax cuts, decreased social spending, and the deregulation of domestic markets. Reagan’s supply-side fiscal policy saw positive results with the inflation rate reduced to 4%, the unemployment rate reduced to 6%, and average annual gross domestic product (GDP) growth of 3.51%. In 1984, GDP under the Reagan Administration increased 7.20% for a record post-1980 high.”

Agreed but that’s when tax rates were a lot higher than today and I as pointed out, this is when trickle-down economics is more effective. But he also added a lot of debt as he significantly ramped up military spending. – Ryan L

#16 Ryan Lewenza on 11.09.19 at 5:15 pm

I’m Stupid “Nice post Ryan. What is the impact of lower interest rates as contributing factor of the wealth gap? I suspect having negative (real return) interest rates encourages more spending from the bottom of the income scale. What are your thoughts?”

I actually think low interest rates would contribute to the wealth gap. Low interest rates greatly supports the stock market, which benefits the wealthy more but there are definitely some benefits of low rates for lower income families, for example, making home ownership more affordable. That’s a tough one. I would have to ponder that one some more. – Ryan L

#17 The Great Gazoo on 11.09.19 at 5:20 pm

Excellent post Ryan. Thanks

#18 Ronaldo on 11.09.19 at 5:30 pm

#4 Stan Brooks

How long more do you think we can tolerate inflation of 6-8 % while rates are at zero?
——————————————————————-
I suspect that we are nearing the point of supersaturation of debt. Would be interesting to know what percentage of people’s income are being gobbled up by the banks right now. Has to be very high. There will come a point where those that we rely on to keep this consumption economy going will be so tapped out in debt that the wheels will fall off. Can’t be too far off.

#19 JSS on 11.09.19 at 5:37 pm

Alberta is the leader in trickle down economics.
Cut corporate taxes, then cut public sector to match.
What could go wrong?

#20 Flop... on 11.09.19 at 5:38 pm

Well, I know the Westerners and the Easterners aren’t supposed to be getting along but I would like to try to help someone in Quebec, Ontario even, win a gem.

There are things I will probably mess up but if you are interested enough you will do your own research.

I have been watching a show called Expedition Unknown where the host Josh Gates goes all over the world in search of uncovering valuable artifacts lost to time.

One of the things the show has focused on locally is Byron Priess’ The Secret Tresure Hunt in which you follow some cryptic clues and have the aide of a painting to find a box with a key in it.

Byron passed away in 2005, so you give the key to the surviving wife and daughters and they give you what ever precious stones are matched to the painting and city.

You still with me? Probably not, but I’ll continue.

All 12 treasures were buried in 1982.

One was found in Chicago in 1983.

Then nothing happened for 20 years until one was discovered in Cleveland just before he died in 2004.

People have been looking for this stuff for the best part of 40 years so the city’s have mostly been decided but the burial location yet to be found.

Nothing much happened between 2004 and now but about a month ago the third one was discovered in Boston.

This post is a train wreck, but my main point is one of these treasures is supposedly buried in Montreal, they are only down a couple of feet in a Perspex box, mainly in public parks, from what I have gathered.

I’ve been on this blog for around 5 years now and I think that among the rabble there are some smart cookies, and I believe someone on this blog can solve this riddle.

Below is the verse, and a couple of links to get you started.

Remember, if you end up in jail, do not to call the boss of this blog for bail money…

M45BC

Lane
Two twenty two
You’ll see an arc of lights
Weight and roots extended
Together saved the site
Of granite walls
Wind swept halls
Citadel in the night
A wingless bird ascended
Born of ancient dreams of flight
Beneath the only standing member
Of a forest
To the south
White stone closest
At twelve paces
From the west side
Get permission To dig out.

http://thesecret.pbworks.com/w/page/86287300/Verse%2005

http://mysteriouswritings.com/where-are-the-casques-of-the-secret-treasure-hunt-by-byron-preiss-thought-to-be-buried-and-why/

#21 Cici on 11.09.19 at 5:39 pm

Good article, but I think you are missing a very important point about the one-percenters by assuming they are judt going to consume one yacht and a handful of luxury items.

If I were a one-percenter, I’d buy the yacht, but I’d alsobuy the yacht club. And if I had enough capital, the canoe and kayak club too. I’d also be proactive in getting people to want to take part in those incentives by offering special rates for the younger generations, running affiliate clubs and courses with high schools, colleges and universities and other incentivesfor the greater public through rec centers and even in participation with local sports/outdoor living stores and outfits.

OK, I’m getting to the point: the rising popularity of my clubs and there offerings would enable to pay my support staff decent wages, so I’d have an easy time finding high-quality candidates as I grew and expanded.

Yes, I’d then invest MORE: maybe open a glitzy bar on the waterfront that would host weekly events like salsa dancing, etc. I’d also expand my fleets of rental boats, canoes and kayaks. Maybe buy a resort on a local island or work in partnership with an already-established resort to offer group sailing and other excusions.

So, my investments would make me richer while also making other peole richer and growing the local economy.

#22 Ronaldo on 11.09.19 at 5:40 pm

Canadian indebtedness. How much more can we take?

https://business.financialpost.com/personal-finance/debt/shrinking-disposable-income-pushes-more-canadians-into-debt

#23 Cici on 11.09.19 at 5:50 pm

Oops, sorry spelling and grammar Nazis, I actually meant:

just going to consume

I’d also buy

want to take part in those activities

and other incentives for

clubs and their offerings

enable me to pay

also making other people richer

#24 Cici on 11.09.19 at 5:53 pm

Dammit: excursions

Guess I went overboard on the Rye, but it was worth it!

#25 Debtslavecreator on 11.09.19 at 6:03 pm

Great article Ryan
I would
-define income as all net rents,wages,salaries,dividends,foreign income , partnership income , capgains including exercised stock options with only exception being applied to resident founders/shareholders of Canadian startups /micro caps who operations are in Canada on the capital gains /stock options with a tax free limit
-then eliminate 95% of all deductions and credits as that’s where the govt loses a ton of revenue
-slowly increase HST up to 17-18 % with 1% shared with cities /towns and the province gets 2
-all households with less than 30-35 k /year get 3-400/ m tax free pre-bate to offset HST on daily expenses.
-then based on overall real income; first 50 k no tax; 50-100 k pay 10%; 100-300 k pay 15%; above pay 25 %
-require BofC to maintain positive real rates / eventually get them out of short term rate intervention
-eliminate CMHC /NHA for all home buying – this org will be dedicated to financing rental buildings for low income / middle class renters
-slowly reduce the public sector union employees

We need an economy more similar to Israel with high level of entrepreneurship and innovation

We need to reduce the impact of the banks , RE developers and construction sectors

Lowest hanging fruit would be a total tax reform
Imagine the reduction in compliance costs for all including the feds

Everything the govt has done and plans to do is to move toward even more government intervention

#26 Oakville Rocks! on 11.09.19 at 6:09 pm

Excellent post as always Ryan!

#27 putrid on 11.09.19 at 6:26 pm

DELETED

#28 Long-Time Lurker on 11.09.19 at 6:53 pm

Ryan, any thoughts of the U.S. Federal Reserve continuing to insert billions of dollars into the U.S. banking system on a weekly basis?

Is this the return of Quantitative Easing without calling it Quantitative Easing?

#29 The Real Mark on 11.09.19 at 6:55 pm

Shawn Allen wrote yesterday: “We have Normal course issuers bids (buy backs). It is really a shame that corporations in general can’t sell shares easily like that to the public. ANYONE can sell their shares of Costco at any time – except Costco itself.”

But to whom? And in what fashion? Yes, I can go out tomorrow and get the shares registered in my name for a multitude of companies that I own. But can I legally advertise such shares for sale on Kijiji to the general public, like I can for nearly any other piece of property I own and want to sell?

Why do securities brokers have to go through, at the very least, the Canadian Securities Course, and have a whole big regulatory compliance department if selling owned securities to the public is so easy?

I honestly don’t know the answer (and you may not either), but it seems that the public sale of securities, by not only an issuer, but also by 3rd parties, is legally a more complicated endeavor than merely selling almost any other property.

#30 IHCTD9 on 11.09.19 at 7:10 pm

#98 MF on 11.09.19 at 1:44 pm

IH,

The boomers invented the welfare state.

MF

——

Not like this they didn’t. Besides, I got no issues with social programs and helping those who actually need it.

But, when it comes to families like mine (and so many others I know) getting thousands and thousands worth of handouts – that’s going too far. We can thank Trudeau for kicking that one off – and like Ryan said in an earlier blog, there’s almost no way to un-kick that social spending ball, and the bill comes back every single year, basically forever.

Should the government be buying me these delightful knobby tired machines? I’m not kidding one bit when I say since Trudeau got in, I’ve banked MORE than enough to buy TWO Grizzly 700 SE’s just from handouts. If you add in the income tax cut, and my tax returns, I could buy FOUR more! Four years of Trudeau, 6 new Grizzly 700’s in my garage.

I have a bro who has a low household income and 3 kids, they get a flabbergasting level of CCB, and banks EVEN MORE taxes back in the spring than us. How much? Almost 9 new Grizzly 700’s worth in 4 T2 led years. This for a household with a paid off home, a couple paid for building lots, and a fat chunk of savings from RE profits. The Libs have totally lost their minds with these handouts, I do not doubt one bit that 40% of Canadians do not pay a dime in income taxes, I see it all over the place.

Between my bro and I, we could open a damn dealership. We sit around and laugh over coffee at how this is turning out. Neither one of us is financially hurting in the slightest. I have to wonder who will be paying the bills 4 years from now – because it sure as hell won’t be us.

I don’t think most Canadians are aware of just what is going on here, and I don’t think the boomers had this outcome in mind.

#31 akashic record on 11.09.19 at 7:34 pm

That trillion deficit is going to make awesome profit for some.

No wonder it keeps trickling up.

“As of March 31, 2018, the Ontario government’s total debt is projected to be CDN$348.79 billion.

Interest on the debt is CDN$11.97 billion, representing its fourth-largest spending area.”

Let this sink in… the fourth-largest spending area.
At historically unprecedented low interest rate.

Who has incentive to reduce government debt?

Investors don’t – it’s risk-free, government guaranteed money.

Politicians don’t, they are using deficit spending as a personal re/election tool. Government bureaucracy doesn’t, it pays for good public sector salary, benefits, pension.

Non-tax-payers (40%) don’t, they virtually live off deficit.

1%-ers, pay much taxes, but their products and services are partially paid by the debt, so not much incentive there to reduce that revenue stream.

Average T4-tax slaves can be grateful, the existence of their job is likely tied one way or an other to deficit spending.

It’s the most beautiful, perfectly legal ponzi scheme.
What’s not to not like about it?

#32 short horses on 11.09.19 at 7:51 pm

I agree with all of your points, Ryan, but something needs to be done differently to sell this during elections.

“I turned down the promotion because I figured I’d end up taking home less pay after taxes” is the Common Sense argument I still hear against progressive taxes. Progressive politicians aren’t doing a very good job countering it when they slip into technocratic speak.

#33 Ronaldo on 11.09.19 at 7:55 pm

Interesting links on incomes and affordability, etc.

https://globalnews.ca/news/5201798/millennial-homebuyers-income-cities-canada/

https://www.macleans.ca/economy/realestateeconomy/best-communities-canada-affordable-real-estate-2019/

#34 Kurt Edwards on 11.09.19 at 8:01 pm

Ryan: It’s nice to wish tax cuts for everyone, but how do which choose which government services to cut to balance our government budgets? Do you have some heuristic to choose which services to drop? Many of those services are public goods, like police and the courts (the largest single line item in many city budgets is the police), but they must be provided by a government. How do we choose which public services return enough to society to make it worth retaining them?

#35 Nonplused on 11.09.19 at 8:21 pm

Ryan,

Your first graph titled “How Supply-Side Economics Works” is econ 101, but it is not a good illustration of trickle-down economics.

The supply-demand graph is a good explanation of how markets reach equilibrium, and can also explain how increased productivity leads to increased market demand (because prices are lower). For example, let’s look at the cell phone. When it first came to market some 30 or so years ago, very few people could justify the outrageous expense. As the price (and size) continued to drop pretty much everyone in business had one. Soon all our kids had one too. As they became “smart”, and data became less expensive, they became things even the poor had in their pocket. This is a great example of the supply curve shifting to the right. As the price dropped and the capabilities increased, demand skyrocketed. But this increase in demand came from the lower end of the income range. High income individuals were early adopters of the original and very expensive phones, but demand was low. Once the phone became the only computer you needed at a reasonable monthly fee they started showing up in the backpacks of school children.

Trickle-down economics from the point of view of taxes doesn’t work because it does not actually move the supply graph, although it can move the demand side if taxes are high enough to curtail spending. The problem is that 50% of the population doesn’t pay any net taxes now, so 50% of demand cannot be affected by lowering taxes. Then there is another quartile between 50 and 75 percent of taxpayers that pay some tax but not much. The top quartile pays almost all the tax. On a percentage of income basis the top 10% pay way more than the other 90% and the top 1% even more.

So the way our tax system works is that we have 25 people paying most of the taxes for 100 people’s benefit, and of those 25 only 10 are doing most of the work and only 1 is putting in overtime. No wonder the system is failing. If this were a commune the farm would fail. It’s not just socialism, it’s slavery.

Millennials need to understand this: For socialism to work you will be forced to work, or you will get nothing. That isn’t much different from the system we have now. There is no way to form a commune where nobody works, and therefore anyone who does not work must be excommunicated. We’ve seem it before, wherever socialism has been tried millions of people in far larger numbers than the holocaust died.

And don’t give me Scandinavia as an example, those are not socialist countries. Never were. They do have health care though. They are in no ways different than Canada. Social safety net, no socialism.

So anyway I digress. How does trickle-down tax policy affect the rich and the poor. Would lowering taxes on the 1% increase their consumption? Don’t know. But if it does then they will employ more people to build their yachts and country homes. Or they will invest which means a shift of the supply curve to the right, lowering prices for the poor. That’s the theory anyway. I don’t know if it works. But what I know for sure is that any taxes collected from the rich are embedded in the prices that the poor pay for their goods and services, so that moves the supply curve to the left. The rich don’t actually have much money, they only have assets, so whatever taxes they have to pay are embedded in the price of what they sell.

So to an extent, taxing the rich is the same as taxing capital formation. That is the real logic behind trickle-down economics. The idea is that Bill Gates could not have made Microsoft what it is and employ 144,000 people if he could not raise capital by selling his product because it all went to the tax man.

Anyway it is a complicated issue. Econ 101 does not cover it. Capital formation is necessary or the economy cannot grow. The rich spending a hundred million on a yacht and private jet seems distasteful, but look at all the jobs that creates. If the rich can’t buy jets anymore there will be layoffs. Each jet represents lifetime employment for many workers including the pilots, maintenance, and and factory workers.

Socialism is just jealousy. Plain and simple. It is in essence the declaration that Bill Gates can’t have a private jet even if that jet would be for me the difference between having a job and not having a job.

Anyway long rant. My main point is that trickle-down economics is the idea that destroying capital formation destroys the economy, to the benefit of nobody. It has nothing to do with the supply-demand curve.

#36 Nonplused on 11.09.19 at 8:36 pm

#30 IHCTD9

Trudeau’s plan is to take all your money, and then decide how much you get back. To make that palatable, he starts with the giving back.

So for example my wife gets something like $1200 a year in child payments, I don’t know the exact amount. They aren’t tax credits they are outright payments. But she pays $17,000 a year in tax. The idea of socialism is to slowly move the tax rate to 100% or nearer and nearer, while adjusting and creating government benefits that favor the red voters. That is the ideal of socialism: We all pay 100% tax, and get the same government distributions, and anyone who doesn’t like it gets killed, either through being sent to work camps in Siberia of by being cut out of the system.

#37 sonnydaze on 11.09.19 at 8:56 pm

Last year, Walt Disney Co. Chief Executive Bob Iger made $65.6 million — about 1,424 times the median Disney employee’s salary, an amount that heiress Abigail Disney is calling “insane.” Forget supply side, we are in dire need of a “Henry Ford Moment”
https://www.thedailybeast.com/henry-ford-understood-that-raising-wages-would-bring-him-more-profit

The wealth of a nation is the productivity of the people and socialism works well till you run out of people’s money. Time for us to put our thinking caps on!

#38 Mordko on 11.09.19 at 9:25 pm

Keynes was British.

#39 The Real Mark on 11.09.19 at 10:03 pm

Nice article.

#40 meslippery on 11.09.19 at 10:15 pm

What is it that we in Canada can not do here?
Growing Oranges yeah I get it food Stuff.
But why do we need free trade ? we can trade if we want too but why not make jeans in Canada?
Radios? We did it before and what we did make lasted.
So how many times do you buy radios in a year. If they cost more and last for 30 years the cost is over that long
is Pff nothing.
The more trade and work is local the better who dis agrees?

#41 Smoking Man on 11.09.19 at 10:20 pm

Hey over Schooled freeks.

https://youtu.be/bMdeg-WKt1U

#42 IHCTD9 on 11.09.19 at 10:21 pm

#33 Ronaldo on 11.09.19 at 7:55 pm
Interesting links on incomes and affordability, etc
———-

That’s a pile of options there for affordable places to live. Interestingly, IHCTD9 world headquarters is on that list.

The Global article references the statscan update on inTRAprovincial migration I’ve mentioned several times. Toronto is losing more of it’s domestic youth than any other city in Canada, and the latest data shows a 300% increase over the previous data for Tor/Van/Mtl averaged. YVR on its own was up 800%!

Places like Toronto receive their youth from off-shore, not from other places in Canada. The article points out that only 4000 Canadian Millennials made the move to Montreal, Vancouver, and Toronto – COMBINED. That’s almost nothing considering the total was 96,000. You may read that as “those who know, stay away”.

Sure, these cities still gain youth overall, but they’re pretty much all new to Canada, and they don’t know what they’re getting into just yet.

#43 Smoking mam on 11.09.19 at 10:29 pm

https://youtu.be/lCgicPdsxxg

#44 Herb on 11.09.19 at 10:35 pm

“… tax rates are too high for all Canadians, … personal tax rates should be lowered across the board.”

And so say all of us, Ryan. The trick question is where you are going to cut government expenditure enough to avoid the inevitable, theoretical, national bankruptcy.

PS: glad to have found a capitalist honest enough to admit that trickle-down doesn’t work as advertised.

#45 SunShowers on 11.09.19 at 10:54 pm

The Laffer Curve is largely useless.

Mere laborers who are in thrall to capitalism because they don’t own means of production (the overwhelming majority of people on planet earth) are presented with 2 options.

1) Sell their labor to an oh-so magnanimous capitalist.
2) Starve to death on the street.

Income tax rates literally don’t matter to these people when it comes to whether or not they’ll show up to work, because they have no choice. You could hike their income taxes to 60%, 70%, 80%, pick a number. People still have to eat. If anything, they’ll have to work even harder or pick up a second job since they won’t have as much money left to buy food. Mechanics and plumbers don’t have access to accounting wizards at places like KPMG to hide their income from the tax man either.

I’m not saying that taxing blue collar workers 80% is good idea, just pointing out that Laffer’s theory is bad.

#46 IHCTD9 on 11.09.19 at 10:59 pm

#36 Nonplused on 11.09.19 at 8:36 pm

The idea of socialism is to slowly move the tax rate to 100% or nearer and nearer, while adjusting and creating government benefits that favor the red voters.

——-

Well, they’re doing a pretty lousy job of it. The bro and I drag knuckles all day and dream about another Harper or Harris to come along. Yet here we are planning additional wings on our garages to stuff all the proceeds of government supplied capital.

I’m thinking it’s more along the lines of net fishing. It’s hard to cast a net for a haul of Sardines, without inadvertently pulling in a few of their predators too. IMHO, the big CCB increases are to woo the female vote. Single Mothers are a huge demographic, and are expected to explode in the future. Further, I’d say most all mothers right across the board work, and many of these are educated and well paid – this will continue to expand as well.

Dual income families usually make a good household income, so the Libs had to cast a pretty wide net to catch them all – the income cut off ended up needing to be sky high. Way too high.

So, now the net is half full of seals, Tarpon, and Mackerel!

#47 nobody special on 11.09.19 at 11:01 pm

Keynes wasn’t just British, he was so British he was almost a caricature of being British !

#48 Nonplused on 11.10.19 at 12:14 am

#38 Mordko

That is so. But his ideas did influence American economics. At the time, von Mises was probably the most influential economic thinker in America (although he was Austrian), but Keynes changed all that. We live in a Keynesian inspired world now. The money will be printed until we just can’t stand anymore of it.

#49 akashic record on 11.10.19 at 12:35 am

#37 sonnydaze on 11.09.19 at 8:56 pm

Last year, Walt Disney Co. Chief Executive Bob Iger made $65.6 million — about 1,424 times the median Disney employee’s salary, an amount that heiress Abigail Disney is calling “insane.” Forget supply side, we are in dire need of a “Henry Ford Moment”
https://www.thedailybeast.com/henry-ford-understood-that-raising-wages-would-bring-him-more-profit

Henry Ford understood that raising wages would bring him more profit.

Globalists understood that expanding labor and consumer markets would bring them more profit with stagnating or lower wages.

That makes it possible for Bob Iger to make $65.6 million, although he can’t possibly be compared to Walt Disney or Henry Ford in any sense.

#50 Wexit Brother on 11.10.19 at 1:27 am

DELETED

#51 PetertheSeparatistfromCalgary on 11.10.19 at 2:18 am

Liechtenstein’s top tax rate is 29%. It’s per capita income is $142,700.00 USD. Canada’s top tax rate is over 50% and our per capita GDP is $45,032 USD.

An independent Alberta could afford lower taxes by not sending our wealth to Quebec.

Enough said!

#52 Mr Canada on 11.10.19 at 7:51 am

The current system is not sustainable and we continue to rely on the declining cohort of the top 20% of people to fund 56% of ALL taxes, just not Fed, Provincial we are talking payroll, property taxes, sales taxes etc. We are also creating a culture of dependency where government has the answer to all our problems, while economic freedom erodes and success is now labelled as “greed”. The bottom 50 per cent of income-earning families in Canada earn just 20 per cent of all income, but pay just 14.6 per cent of all taxes. Is that Fair? We also have a huge demographic shift happening that nobody talks about where the top 20% are happily retiring or withdrawing to a much lower tax bracket and not being replaced. Time to introduce a flat tax, eliminate all deductions, CCB etc, and ensure nobody gets a free ride, regardless of your income and everyone pays their “fair share”. But rationale thought ended years ago.

#53 Randy on 11.10.19 at 7:54 am

Taxes are OBSCENE (should be illegal) and destroys the Work Incentive. That’s why I retired very early. Somebody else can support the Tax Theft Programs that our Governments are running. Debt and Stress will kill you early.

#54 Felix on 11.10.19 at 8:22 am

Another disgustingly revealing dog pic today, uselessly peeing and dumping all over the planet, never cleaning up after themselves like cats do.

Which end of the creature pictured is the more intelligent?

I vote for the left side. There’s zero IQ on the right side.

#55 Figure it Out on 11.10.19 at 9:07 am

Kansas is the case study you’re looking for. People can argue all day about how the economy would have evolved differently without the Trump tax cuts, but Kansas’s state tax cuts provided a great real time experiment whose performance could be compared to its neighbouring states with similar economies. Even Laffer got in on the act, first giving it the thumbs up, then disavowing things and making excuses when things went pear shaped.

https://en.wikipedia.org/wiki/Kansas_experiment
https://ritholtz.com/2017/10/kansas-vs-neighbors/
https://www.cbpp.org/research/state-budget-and-tax/kansas-provides-compelling-evidence-of-failure-of-supply-side-tax-cuts

#56 crowdedelevatorfartz on 11.10.19 at 10:07 am

@#53 randy
“Taxes are OBSCENE (should be illegal) and destroys the Work Incentive. That’s why I retired very early. Somebody else can support the Tax Theft Programs that our Governments are running. Debt and Stress will kill you early.”
+++++

Thank taxes the next time you.
Drive on a road.
Drive on a snow plowed road.
See a school bus.
See an ambulance on the way to a hospital.
See a police car on the way to a crime.
See a fire truck.
On and on and on.

As far as ‘retired very early”….Newsflash randy…..you still pay taxes in retirement.

#57 crowdedelevatorfartz on 11.10.19 at 10:14 am

Good Article Ryan.
I agree that Canadian tax rates are puntitive.

I wonder if we will see “Flat Taxes” in our lifetime.

Say a 15% to 20% Flat tax straight across the board.
Everyone, rich, poor, companies, religions, ….. everyone pays 15% or whatever amount is decided.
No more hocus pocus tax laws, no more fancy tax avoidance schemes, no more crap.
You pay 15% and thats it.

It would put a lot of lawyers, accountants and bureaucrats out of work but….who cares.

#58 Dan August on 11.10.19 at 10:21 am

Let us be very clear. Keynes knew that governments will not reduce spending in better economic times and as a result government debt would keep growing and growing.

The fact is that Keynes was a socialist disguised as using an economic theory which he knew would never work. When government and other authorities become the be all end all of the economy and people’s finances, it just spells long term trouble.

#59 crowdedelevatorfartz on 11.10.19 at 10:24 am

@#50 Wexit and 51 CowpokePete

Are you guys still Harp(er)ing on about separation?
Still beating the dead horse that kicked you both in the head?

#60 Ryan Lewenza on 11.10.19 at 10:33 am

Long-Time Lurker “Ryan, any thoughts of the U.S. Federal Reserve continuing to insert billions of dollars into the U.S. banking system on a weekly basis? Is this the return of Quantitative Easing without calling it Quantitative Easing?”

This is different to QE. These bond purchases are to support the overnight funding markets and provide liquidity. It’s similar but different as the Fed is not actively buying long-term bonds to drive rates lower, rather just providing short-term liquidity to banks. – Ryan L

#61 Ryan Lewenza on 11.10.19 at 10:41 am

Kurt Edwards “Ryan: It’s nice to wish tax cuts for everyone, but how do which choose which government services to cut to balance our government budgets? Do you have some heuristic to choose which services to drop? Many of those services are public goods, like police and the courts (the largest single line item in many city budgets is the police), but they must be provided by a government. How do we choose which public services return enough to society to make it worth retaining them?”

You review every spending program, prioritize them by societal importance, and make the tough decisions to cut some programs. The government can’t be all things to all people. Program spending is cumulative, meaning every year and every election politicians just add on new programs and spending. We should now go back through every major spending program and decide how impactful/critical they are and if low impact then they need to be cut/ended. It’s sucks but the alternative is so much worse down the road. – Ryan L

#62 Dharma Bum on 11.10.19 at 10:43 am

The Canadian government needs to cut the marginal tax rate across the board, and compensate for the lower revenue by cutting their spending on the most insanely frivolous of special programs that the majority of Canadians do not benefit from.
Stop the insanity.
Trudeau: Are you listening?!

#63 Dharma Bum on 11.10.19 at 10:59 am

#25 Debtslavecreator

We need an economy more similar to Israel with high level of entrepreneurship and innovation.
——————————————————————–

Too many slackers and takers and dummies and entitled weaklings in Canada for that to happen.

Necessity is the mother of invention.

https://interestingengineering.com/11-israeli-inventions-that-have-changed-the-world-for-the-better

#64 IHCTD9 on 11.10.19 at 11:11 am

#45 SunShowers on 11.09.19 at 10:54 pm
The Laffer Curve is largely useless.

Mere laborers who are in thrall to capitalism because they don’t own means of production (the overwhelming majority of people on planet earth) are presented with 2 options.

1) Sell their labor to an oh-so magnanimous capitalist.
2) Starve to death on the street.

Income tax rates literally don’t matter to these people when it comes to whether or not they’ll show up to work, because they have no choice. You could hike their income taxes to 60%, 70%, 80%, pick a number. People still have to eat. If anything, they’ll have to work even harder or pick up a second job since they won’t have as much money left to buy food. Mechanics and plumbers don’t have access to accounting wizards at places like KPMG to hide their income from the tax man either.

I’m not saying that taxing blue collar workers 80% is good idea, just pointing out that Laffer’s theory is bad.
——

You think folks will show up for work at 80% tax? Yiyiyi, you must have a very uncreative mind.

I mention a bro of mine in yesterday’s comments. He has not had a steady conventional job since the 90’s. He works off and on when the jobs are good enough, he dabbles in RE, and runs a small business, all kinds of stuff.

THAT is what folks would do if taxes went to 80%. They’d do it under the table too. Laffer is 100% correct for those that, well… aren’t stupid, and that’s most folks.

We already saw Laffer was right when Trudeau enacted his new tax on the rich, and it brought in a pittance compared to what was expected. Gee, what happened?

If taxes went that high, the above-board economy would shrink like Ant Man overnight, and revenues would get napalmed. One more thing, once you let folks stop paying taxes, it’s almost impossible to get them to start paying them again.

#65 Ryan Lewenza on 11.10.19 at 11:22 am

Smoking Man “Hey over Schooled freeks.

https://youtu.be/bMdeg-WKt1U

Your best comment yet. What a great tune! – Ryan L

Don’t encourage him. – Garth

#66 Russ on 11.10.19 at 12:13 pm

crowdedelevatorfartz on 11.10.19 at 10:07 am

@#53 randy
“Taxes are OBSCENE (should be illegal) and destroys the Work Incentive. That’s why I retired very early. Somebody else can support the Tax Theft Programs that our Governments are running. Debt and Stress will kill you early.”
+++++

Thank taxes the next time you.
Drive on a road.
Drive on a snow plowed road.
See a school bus.
See an ambulance on the way to a hospital.
See a police car on the way to a crime.
See a fire truck.
On and on and on.

As far as ‘retired very early”….Newsflash randy…..you still pay taxes in retirement.
=======================================

Interesting viewpoint crowdy.

But let’s also curse taxes when we:
– pay GST tax on the carbon tax
– hear about Phoenix payroll costs
– deal with Services Canada
– remember SNC Lavalin
– find out that income tax rates are not applied fairly
– review Dept. of Indian Affairs spending (hint: the bulk goes to comfortable administrations, as in bureaucrats & lawyers) not trickle down to the reserves for clean water, housing and such
– On and on and on

Cheers, R

#67 Westcdn on 11.10.19 at 12:14 pm

A guest of Putin is watching the Russian May Day parade in Red Square in Moscow. After the weapons of mass destruction had passed, an open topped limousine with 3 men sitting in the back brought up the rear. The guest asks Putin who the 3 men are – economists. I remember a commenter who wrote a PHD is knows more about less ala expert/consultant – bring up the menu Jerbes.

I believe in the business cycle where boom/bust is natural. Prosperity brings about a competency and a misallocation of resources so a reset is necessary and painful. It is wise to be prepared for a long lean period unless you know how to sell.

Speaking of Equalization where Federal Income Taxes are the same regardless of where you live, I point out there is a reason incomes are higher in Alberta. Why would a Central Canadian move to Alberta for the same remuneration?

#68 Drink up on 11.10.19 at 12:42 pm

#41 Smoking Man on 11.09.19 at 10:20 pm

Hey over Schooled freeks.

https://youtu.be/bMdeg-WKt1U
………………

Well I woke up Sunday morning
With no way to hold my head, that didn’t hurt
And the beer I had for breakfast wasn’t bad
So I had one more for dessert
Then I fumbled in my closet through my clothes
And found my cleanest dirty shirt
Then I washed my face and combed my hair
And stumbled down the stairs to meet the day

I’d smoked my mind the night before
With cigarettes and the songs I’d been pickin’
But I lit my first and watched a small kid
Playin’ with a can that he was kicking
Then I walked across the street
And caught the Sunday smell of someone’s fryin’ chicken
And Lord, it took me back to somethin’
That I’d lost somewhere, somehow along the way

On a Sunday morning sidewalk
I’m wishing Lord that I was stoned
‘Cause there’s something in a Sunday
That makes a body feel alone
And there’s nothin’ short of dyin’
That’s half as lonesome as the sound
Of the sleepin’ city sidewalk
And Sunday mornin’ comin’ down

#69 AGuyInVancouver on 11.10.19 at 12:43 pm

#51 PetertheSeparatistfromCalgary on 11.10.19 at 2:18 am
Liechtenstein’s top tax rate is 29%. It’s per capita income is $142,700.00 USD. Canada’s top tax rate is over 50% and our per capita GDP is $45,032 USD.

An independent Alberta could afford lower taxes by not sending our wealth to Quebec.

Enough said!
– – –
Lichtenstein is also the size of a postage stamp and possibly one of the most boring places on Earth.

#70 Stan Brooks on 11.10.19 at 1:43 pm

DELETED

#71 Dogman01 on 11.10.19 at 1:52 pm

“If you feed enough oats to the horse, some will pass through to feed the sparrows” (referring to trickle down economics). – John Kenneth Galbraith

I remember “Ralph Bucks” in Alberta, I think about a $400 dividend to every Albertan, caused a short term jump in the local economy.

All this QE stuff could have been more effective in just giving each low income American and extra $1000 a year.

There is a good short story entitled “Fairy Gold” about introducing short term and short lived gold (cash) into the bottom of an economy to stimulate economic activity and jump start a stall.

#72 Stan Brooks on 11.10.19 at 1:54 pm


#52 Mr Canada on 11.10.19 at 7:51 am
The current system is not sustainable and we continue to rely on the declining cohort of the top 20% of people to fund 56% of ALL taxes, just not Fed, Provincial we are talking payroll, property taxes, sales taxes etc.

Exactly.

I personally have no intention of supporting parasite oligopolies, or to wash the behinds of entitled old baby boomers or pay the child support of entitled debt slaves while taking on huge sacrifices, including killer taxes with no rewards whatsoever.

Let all of them enjoy their debt slaves paradise, but be aware, we are running out of capable people and entrepreneurs.

Where I am is 25 degrees today, enjoyable quiet time far way from the mentally challenged ignorantus-es in the big cities there. Even Greece these days is a pretty much paradise, was there a few days ago, total relax, perfect weather, great and fresh food/no GMO shit.

An absolute paradise. Enjoy the frozen hell folks.

Cheers,

#73 Smoking Man on 11.10.19 at 2:14 pm

65 Ryan Lewenza on 11.10.19 at 11:22 am
Smoking Man “Hey over Schooled freeks.

https://youtu.be/bMdeg-WKt1U”

Your best comment yet. What a great tune! – Ryan L

Don’t encourage him. – Garth
…….

Have zero recollection of posting this comment.
Happens everyone I’m day drinking Makers Bourbon.

Potent to say the leased.

#74 Stan Brooks on 11.10.19 at 2:15 pm

Not sure how stating the obvious: That ‘Lichtenstein is close to Austria, Switzerland, Italy, France, Germany, with great weather and close to the best sky resorts in the world, great relaxing place for the rich and not for the debt slaves poor’ is politically incorrect statement at this place. Looking from outside it is actually quite amazing and entertaining.

Cheers with premier scotch today,

#75 Linda on 11.10.19 at 2:19 pm

Depending on a person’s ability to balance the books, seems like most folks go through 3 stages. First stage, young graduate starts earning & most of the money goes to splurge on stuff/pay off student debt. Second stage, settling down. Relationship/establishing a household/possibly children. Debt load may soar depending on what choices are made. Third stage, debt free, asset rich & children if any have graduated/launched from the nest. Retirement has either occurred or will occur within 5-10 years. Most usually have all the stuff they want & may in fact be looking to downsize.

Point being, income levels may have dropped as retirement income is usually lower than employment income, but expenditures usually drop as well & not because someone can’t afford to buy. How many times have you heard this ‘I don’t know what to buy for ____, they already have everything’ or ‘our family doesn’t exchange gifts any longer, we donate to charity instead’.

#76 Dogman01 on 11.10.19 at 2:33 pm

#25 Debtslavecreator on 11.09.19 at 6:03 pm

Great ideas, simplify makes it transparent.

Most people are of average intelligence and cope best with low complexity.

“Everything the govt has done and plans to do is to move toward even more government intervention”….

I would add “and less transparency”.

#77 Dogman01 on 11.10.19 at 2:46 pm

#45 SunShowers on 11.09.19 at 10:54 pm

There is a saying:

“To get a rich man to work harder you have to pay him more.

To get a poor man to work harder you pay him less”

I have seen it in action, I used to own a construction company, in summer when I had lot’s of work and the crews were pulling down good money, you could not get them to work much, and on payday you could not get them to work at all. Show up stoned or not show up at all.

But in Winter, when the paychecks were skinny and the jobs were sparse, they were all there bright and early; flexible for weekends and sober etc.

#78 Brian Ripley on 11.10.19 at 3:02 pm

#57 crowdedelevatorfartz “I wonder if we will see “Flat Taxes” in our lifetime… It would put a lot of lawyers, accountants and bureaucrats out of work”/blockquote>

What is needed is a new generation of digital scientists to take on Tax Reform because the status quo will only move tax credits around from one voting constituency to another. Tax reform, like election reform, only gets lip service before an election.

At the risk of sounding like a broken record, there is a tax model that would work for most of us but not “lawyers, accountants and bureaucrats”.

The Automated Payment Transaction Tax (APT)
“By capitalizing on financial data processing technology, it is possible to create a tax code for the 21st century that is astonishingly easy for all citizens to understand and administer because it eliminates the need to file tax or information returns.” http://www.chpc.biz/history-readings/apt /blockquote>

Potential APT Tax Base and Required Revenue Neutral APT Tax Rates (Page 16 of 41 at http://www.chpc.biz/uploads/9/7/9/5/9795010/taxation_for_the_21st_century.pdf )

“For the remainder of the paper, for illustrative purposes, we shall assume that total transaction volumes decline by 50 percent as a result of the replacement of the existing tax structure with a revenue neutral APT tax. This will require a uniform flat rate on all transactions of 0 .6 percent divided equally between the buyer and seller of each transaction. Each party to a transaction would then pay 0.3 percent of the transaction value to the government.”/blockquote>

Edgar Feige (Phd) is the author and he used U.S. economic data from the late 1990’s – 2000 and arrived at the hypothesis that only 0.3% tax needed to be charged to both sides of a financial transaction (0.6% total tax) to reach a “revenue neutral” state to run the U.S. government (tax collected equals government revenue spent).

My appeal is to young Canadians to take this model and transform Canada’s tax system so that we can get back to fiscal policy decisions (infrastructure, environment, education, health and social wellbeing) instead of being mired in monetary policy and negative interest rates.

#79 Tony on 11.10.19 at 5:08 pm

I agree and virtually every book on economics should be thrown in a fireplace as none of them relate to todays’ economics.

#80 Tony on 11.10.19 at 5:29 pm

Re: #60 Ryan Lewenza on 11.10.19 at 10:33 am

The balance sheet is still expanding.

#81 Kevin on 11.11.19 at 1:47 am

Great post, Ryan. I completely agree, thanks for putting energy and thought into this.

#82 Peter Z. on 11.11.19 at 7:58 am

Ryan, Ryan – Keynes was British economist!

#83 Eks dee Siple on 11.11.19 at 9:36 am

Art Laffer, what a laugh. Tax rates are too high because commercial banks are legally allowed to create money out of thin air without any contribution to the economy other than enslaving the population with debt. Why is this so hard to understand? The mortgage is their primary weapon.

If the common man understood this, surely, this would be a disincentive to working and investing, not your diversionary trickle-down magic beans.