9.20.2011

Laffer Curve

Cutting taxes raises revenue. This relationship works in reverse as well. Increases taxes reduces revenue. Only the broken psyche of the so called "Democrats", and their statist ilk, have a problem with this scientific and mathematical logic. Yet the statist created agency called the Congressional Budget Office {C.B.O.} confuse the reverse of the Laffer Curve as true. This is why "Congress" in Washington D.C. get such wrong numbers one what effect their bills have on the economy.

For two centuries science has been able to compile mathematical economic numbers for trillions of transactions in free market economies around the world. In the early 1900s a man named John Maynard Keyne wrongly assumed that government spending has a positive effect on the economy. The statists Presidents Woodrow Wilson, Harry Truman, and Franklin D. Roosevelt all grabbed onto this theory immediately like a lifesaver thrown to someone drowning. So, economics quickly created a name for this too called Keynesian economics.

The problem is that to spend money, government must use force to "take" money from its citizens. Doing this destroys jobs! The effect is so disastrous that there is zero hope for the government to create more jobs than are lost. The reason this is true is because when the government does this. Those who have money "protect" their money and protecting it is the opposite of investing it. So the total amount of money taken out of the system is greater than what the government has to spend.

Even if the Government creates more money this actually creates a universal tax by default. This universal tax is inflation as every dollar is worth less than it was yesterday. It takes more dollars to buy the same thing today than it did yesterday. This is what inflation is and it destroys wealth. This action is so disastrous that economists have a special name for it called "monetizing" the debt. The Federal Reserve Bank, has been doing it for half a decade now and it is demonically evil for them to do so.

Only private sector investments creates jobs. There is a sweet bell in the Laffer Curve around thirteen percent. This thirteen percent is the sweet spot where tax revenue is maximized. Another way to look at this is to realize that the "economy" is like water. If you make a fist, the water slips through your fingers. When you open your hands and form a cup, you hold a great deal more water than your fist ever could.

The mind of a statist is locked in the past. All they see is last years "economy" and falsely wish they could take a slice of the pie. This is how the C.B.O. comes up with numbers that are so very wrong. The reason they are wrong is because the pie is yesterday's pie and we are talking about a "future" pie. Through taking action today.

A Libertarian like Laffer uses geometry and calculus, instead of algebra, to come up with numbers of next year. Look at recent history of trends and overall change in various different ways. Then a winner like Laffer uses calculus and geometry to make the hurdle of finding "next years" numbers. The more precise the data the more accurate they end up being. That is how an agency like the Heritage Foundation create a track record of being right 96.8% of the time. Among other things they do what the C.B.O. does but Heritage ends up be right far more often.

KNOWLEDGE