tag:blogger.com,1999:blog-3811162471906152958.post1948038054218910808..comments2022-12-01T07:10:03.061-07:00Comments on Epicurean Economist: Taxes Taxes TaxesBillyhttp://www.blogger.com/profile/16407189051336532994noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-3811162471906152958.post-60257444948591633842008-10-14T00:45:00.000-06:002008-10-14T00:45:00.000-06:00No I'm referring to the projected budget deficit i...No I'm referring to the projected budget deficit including Iraq for 2009. You are correct about the trade deficit and it not having to do with taxation. On a side note Trade Deficits do have an impact on GDP and a large deficit can be problematic in our current financial system. <BR/><BR/>The problem with a budget deficit is that we are adding to it in massive ways by bailing out these companies and banks. Which begs the question: <BR/><BR/>How do you give these institutions this money, do you increase taxes? Or do you increase money supply? Or do you raise interest rates to encourage foreign investment?<BR/><BR/>Increasing money supply hurts our purchasing power parity, inflation, and is sometimes refered to as a "stealth tax". Increasing interest rates would be problematic and would make it so that banks would be less likely to borrow and lend money and in addition would have the tendency to increase inflation. Nobody likes to raise taxes. <BR/><BR/>Unfortunately all three options are in essence a tax. Either direct or indirect, they all reduce what we are able to consume. Taxing does it directly and the other two options do it through opening the door to inflation making things more expensive.Billyhttps://www.blogger.com/profile/16407189051336532994noreply@blogger.comtag:blogger.com,1999:blog-3811162471906152958.post-76754646504816238692008-10-13T21:59:00.000-06:002008-10-13T21:59:00.000-06:00Correct me if I'm wrong, but isn't the 900 billion...Correct me if I'm wrong, but isn't the 900 billion you mention the trade deficit? I believe trade deficits and surpluses are controlled strictly through trade and not taxation. A mistake I believe many people make because the media tends to intermingle these terms during times of crises. I'm not being funny, just curious...Stevehttps://www.blogger.com/profile/11704545218623547422noreply@blogger.com