“Trickle-Down” Economics….

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Tim Liston
Posts: 657
Joined: Sun Aug 07, 2005 3:10 pm

“Trickle-Down” Economics….

Postby Tim Liston » Sun Dec 03, 2017 1:53 pm

Is there one person alive who really deep down believes that even more wealth directed to already wealthy people and institutions will “trickle down” in some fashion to those on lower economic rungs? Even if only as “jobs jobs jobs”?

That’s how “tax reform” is being sold. That by cutting corporate taxes, corporations will use their additional wealth to (1) create more jobs and (2) increase wages. And that such new wealth will not simply be channeled into dividends and stock buybacks.

Even given almost universal economic illiteracy, it’s astounding to me that they expect people to believe all that. Because (1) new jobs result only from increased demand for goods/services. Increased demand for goods/services results from increased wealth in the hands of everyday people. New jobs are not simply doled out because the money is there, at least not outside of government and government proxy institutions. And (2) even in the face of increased demand, increased wages requires a tight labor market, which for a variety of reasons (off-shoring, automation, etc.) we haven’t seen in the U.S. in decades. To believe in trickle-down economics is to believe the cart can pull the horse.

(As an aside, that said, the proper income tax rate for corporations is 0%. Either corporations are people, or they are not. I say they are not. And yes, the Citizens United decision was an abomination. Dems of course are their usual hypocritical selves on the issue, maintaining that corporations are people when it comes to paying taxes but not people when it comes to political influence. Like Matt Lauer on womens’ issues. At least the Republicans are outwardly in our faces about stuff.)

But somehow the trickle-down narrative must have gained at least a modicum of credibility over the last 2-3 decades. That’s why they’ve rolled out the trickle-down Big Kahuna: “Quantitative Easing.” That’s where the Federal Reserve, a private corporation owned by the big banks and controlled by the uber-wealthy via the Princeton eggheads, prints trillions of dollars for the expressed purpose of raising asset prices, primarily the stock market, but with real estate riding in the back seat. Assets which, without Fed help, would be languishing right now. And damn well should be. Is it any coincidence that the Fed has, over the last several years, created several trillion dollars’ worth of new “money” (credit, really, at almost 0% interest) and that the overall market cap of equities (stocks) has risen by (drum roll….) several trillion dollars? I think not.

We’re being told that a rising stock market is somehow good for us even though we don’t have very much money in the market. Trump even takes credit for it, like he has anything at all to do with it (not), and even though it was a “big fat bubble” during the campaign. But now they call it the “wealth effect,” because “trickle-down” must not pass focus group muster anymore. But beyond some dribs and drabs some of us have in our 401k’s, 98% of the remaining equities are held by the already-wealthy. (They did throw us a bone by restoring our home values to where they were before the bottom fell out some years ago.)

And if you’re young, you’re getting uber-schlonged. That’s because by doubling and tripling the price of stocks, they’ve doubled and tripled what you need to set aside to retire. The best thing that could happen for young millennials is a stock market crash. But they don’t know that. And of course, that will never be allowed to happen. Not anymore, not since the Fed discovered that the shiny new “wealth effect” narrative and the relative smidgen that QE bestows on everyday people gives them cover for endless QE. So they could pull it off without finding themselves at the wrong end of a pitchfork.

You wanna talk about being played? This is it. The Super Bowl of being played. Thanks for reading.


james fitzgibbons
Posts: 412
Joined: Sun Jan 31, 2016 3:34 pm

Re: “Trickle-Down” Economics….

Postby james fitzgibbons » Mon Dec 04, 2017 4:14 pm

Thanks for that Tim. Most people do not have money to buy stocks and would not really have the expertise to profit from it, unless it is just luck. My dad did not have much money but he figured out how to make it pay. It was fun for him.
I can not believe they are still talking " trickle down ". What a sick joke.


Bret Callentine
Posts: 560
Joined: Tue Oct 17, 2006 3:18 pm
Location: Lakewood

Re: “Trickle-Down” Economics….

Postby Bret Callentine » Fri Dec 08, 2017 10:23 am

If you're actually looking for a good description of where the term "trickle down economics" came from and a brief accounting of the underlying conservative principles that it has been tied to, I would highly recommend the following...

https://www.amazon.com/Trickle-Down-The ... 0817916156

as I would highly recommend most of the writings of Thomas Sowell.

I won't try to change your mind on economic policy issues, but I will say, whether you like it or not, your economic prosperity is very much tied to the stock market (even if just through ancillary finance issues), so even if you don't feel the desire to invest in stocks, bonds & mutual funds, or don't think you have enough money to get started (it actually doesn't take much), I would suggest EVERYONE have at least a cursory knowledge of the principles it's founded on and the policies that are currently steering its use.


"I met with Bret one on one and found him impossible to deal with." - S.K.
ryan costa
Posts: 1947
Joined: Fri Jan 06, 2006 10:31 pm

Re: “Trickle-Down” Economics….

Postby ryan costa » Sat Dec 16, 2017 5:06 pm

Aside from the bombastic or off-putting titles, a few of Professor Ravi Batra's books go a long way toward insinuating that Economics is the opposite of a real field of Science. This is because the more advanced Economics gets, the less realistic Economics gets. This makes it the opposite of science. This is ultimately irrelevant, because most voters are more interested in watching sports on tv, or celebrity gossip on tv.

For a less nuanced approach, I recommend Bruce Cannon Gibney's "A Generation of Sociopaths". It doesn't explain much, and most of the reasoning is a stretch, but it explains why I voted for Bob Dole instead of Bill Clinton when I was 18. I had a pathological fear of hippies.


"assume we have a can opener" - Ravi Batra

"Good luck with what you're doin'".--Ramses Luther Smuckles.
Tim Liston
Posts: 657
Joined: Sun Aug 07, 2005 3:10 pm

Re: “Trickle-Down” Economics….

Postby Tim Liston » Sat Dec 30, 2017 3:27 pm

This just in! It seems that Wall Street is taking advantage of its last opportunity to compensate top brass under more favorable terms, before the new tax laws kick in. Trickle-down indeed….

Goldman Showers Execs With $100 Million in Early Bonuses to Avoid Trump Tax Hit (click here).

(Admittedly when I saw the headline I thought it was kind of amusing…. :D )

The last time corporate taxes were cut, 94% of the benefit was used on stock buybacks and dividend payments (click here). (The original WSJ article is behind a paywall so I linked this one. I do read Mish from time to time.) I don’t expect it to be any different this time. Why would it be? And I also suspect that much of the benefit of lower corporate taxes has already been factored into stock prices. My last guess is that a falling dollar will be the next catalyst for even higher stock prices, or at least will prevent declines. So long as Trump doesn’t try to fulfill his populist campaign promises. Then all bets are off….

Ryan – I threw Gibney’s book in my Amazon cart. Though I hadn’t heard of it before, I do believe that boomer self-enrichment has unfairly damaged the fortunes of their (our) progeny. And now that QE and now the new tax laws have driven stock prices to ridiculous levels, younger people are hurt even worse. It’s hard to save for retirement with stock and bond prices so high. These days I invest strictly FBO my offspring. And to a much lesser extent a couple non-profits.



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