The problem with that is then the Government jobs will crowd out private employement. a 10K check will across the board to the people earning 70K and less will provide more stimulus and quicker velocity of money increase.
Yeah you are right. The government could lower taxes for poor people and increase for wealthy this would keep income the same but increase money.
Hmmm...Hmmm...I never buy things when they are "on sale". Just trying to do my part to help the economy. I wait till they go back up. But, then, I could be all mixed up about this. Afterall, I personally, am not an economist. But, in my opinion, neither is anyone else.
Also Deflation is going to be corrosive the the American joe sixpack up to the eyeballs in debt with no savings. Japan's population was able to do okay because #1 they had a decent amount of savings and do not tend to go for borrowing and debt. Deflation will be horrible for Generation Y with 100K debt loads they had to acquire to get the work permit via College and of course College Loans are non dischargeable. So they will stay endeured servants for life servicing that never shrinking 100K debt.
Also Deflation is going to be corrosive the the American joe sixpack up to the eyeballs in debt with no savings. Japan's population was able to do okay because #1 they had a decent amount of savings and do not tend to go for borrowing and debt. Deflation will be horrible for Generation Y with 100K debt loads they had to acquire to get the work permit via College and of course College Loans are non dischargeable. So they will stay endeured servants for life servicing that never shrinking 100K debt.
Though I agree with most of what has been pointed out here as to why the Fed wants to avoid deflation, I particularly agree with Morganist as having said very simply the number one reason why deflation in the US economy could be very, very bad. The U.S, unlike Japan, is a nation of borrowers and spenders. During recessions, when individuals are leveraging down, the government steps in and leverages up, .i.e., borrows, and then attempts to move the borrowed money into the economy to partially compensate for decreased private spending. Another driving force behind Government borrowing is its unwillingness, for political reasons, to bring medical and military costs in line with those of other developed nations. This has resulted, except for brief periods, in large federal deficits, one after the other. Borrowing does not necessarily lead to inflation. However federal deficits can result in inflation if some of the money borrowed or used to pay on government debt is "new money" created by the Federal Reserve system. The U.S. has been aided in its profligate ways by its currency being the World's reserve currency. Consequently, the world is awash in dollars. Naturally central banks around the globe will not be enthusiastic about their dollar hoards being devalued. As a hedge against this, they may try and use their dollars to buy hard US assets. The day you borrow money, each dollar you borrow has a certain purchasing power, or worth. If there is inflation, then sometime later the dollars you borrowed will have less purchasing power. We usually borrow and spend the money quickly, so the purchasing power of the borrowed dollars we spend is the same as the purchasing power of the dollars we borrowed. Now imagine that you are going to pay back the borrowed dollars over a period of years. At first the dollars you return to your creditor will have roughly the same purchasing power as the dollars borrowed. However because of inflation, the last dollars you pay back will have substantially less purchasing power than the dollars you borrowed. If the inflation rate eventually becomes higher than the fixed interest rate and the term of the loan is long enough, you might end up returning less net purchasing power to your creditor then you borrowed. In effect you have been able to use your creditors money, and at the same time make a "profit" on it, while cheating your creditor because of inflation. Yes indeed, inflation is the friend of those in debt: both individuals and governments benefit from inflation when they owe a great deal of money borrowed at low fixed interest rates to be paid back over a long time, say thirty years. Now imagine just the opposite scenario. You have borrowed heavily at not so low rates and you have a long payback period, but there is deflation, not inflation. Now the last dollars you return to your creditor will have greater purchasing power than the ones you borrowed. If your interest rate is high enough, and the term of your loan long enough, you may even end up returning more purchasing power to your creditor than you borrowed. You have made your creditor very happy but the real cost of your loan is now much higher than just the nominal amount of interest you paid. Deflation is the enemy of those in debt. Curiously, when a government owes money to its citizens via entitlement programs that the citizens have paid into, and the payments into the program are adjustred from time to time to account for inflation, and also the amounts paid out to citizens are indexed to inflation, the government may find itself in a dilemma. The government wants enough inflation to help it cheat its creditors, but too much inflation could cost many billions more in increased entitlement payments. What to do? The solution to this problem, in the U.S. anyway, has been to change the formula used to estimate the inflation rate. By calculating a lower inflation rate the government saves many billions on entitlement payments and at the same time makes its creditors happy, it least as long as its creditors remain naive enough not to question the official inflation rate. But when the real inflation rate is higher than the estimate, the Government is in fact cheating its creditors just a little bit because those dollars it is paying on loans, i.e., bonds, have a little less purchasing power than the official inflation rate would suggest -- this is especially true if those dollars paid back don't get spent by the creditor right away but get hoarded. It is one big happy win win situation for the U.S. Treasury, but not quite as cheery for the old age pensioner, or central banks around the world. And THAT is why the U.S. can't tolerate deflation. (I must add that I am completely at odds with those who believe there will be substantial deflation in the U.S. Contrary to popular ET opinion, the US Central bank in conjunction with the US Treasury has more than enough arrows in its quiver, now that the U.S. has a fiat currency, to prevent deflation. The danger is not deflation, but out of control inflation. I don't anticipate the latter, but it should, nevertheless, be a concern.)
it would not. the wealthy pay most of the taxes now. if you increase their taxes substantially they will not work. if you tax at 90% on the margin a skilled surgeon who works 60 hours a week he will work 50 hours or 40 hours. are u going to put a gun to his head and force him to operate? maybe some people in the US government would. the bottom line is that deflation is good for a country as it wrings out the excesses of the previous business cycle. governments are against deflation because everyone can see the results of their mistaken policies while inflation causes people to think that the party is never ending.
If there is an actual need for those 10-20 extra hours, somebody else will gladly fill it for the privilege of earning an income that puts them in the top tax bracket.