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1 posted on 02/04/2013 6:07:31 AM PST by ExxonPatrolUs
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To: ExxonPatrolUs
Conversely, countries with high budget and trade deficits should increase taxes, cut government spending and raise interest rates because they may be experiencing an overheating economy and rising inflation.

Raising taxes in light of inflation is one alternative, but I would much rather see a gov't simply cut spending, freeing private income to spread through the system and migrate to those areas the market says needs capital. Monetary policy may have no effect at all under certain circumstances (e.g., the Keynesian Liquidity Trap). This is why, despite QEI-II-III-IV, the Fed has had no real effect on economic growth. The Fed is pushing on a string.

2 posted on 02/04/2013 6:23:20 AM PST by econjack (Some people are as dumb as soup.)
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