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View Diary: Cato: taxes must be increased to stop Bush's Big Government (121 comments)

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  •  Increasing Tax Revenues a bogus reminder (1+ / 0-)
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    boofdah

    For once the MSM didn't jump on something Bushco wanted them to, which is the amount of increased Federal tax revenues in April. Taxpayers evidently got stiffed pretty good this year, and one reason is the AMT, which Bush said should be abolished. On the other hand we have gasoline tax revenues, which one chart I saw proved have actually declined in real terms, but which increase nominally with the cost of a gallon of gasoline.
    The increased cost of gasoline can be directly attributed to the excess supply of credit, and the demise of the dollar brought about by deficit spending. The lag time between the solution, (excess) monetary stimulus, and hard asset inflation, further works in the debting nations favor, which allows them to call inflation reflation. Actually printing money takes even longer before the effects of inflation is felt, and rumor has it the Fed printed 2 trillion in cash recently.
    The theory of Federal Reserve policy assumes that economic flow is more like electricty than water. If you flood the market with liquidity, you don't have to soak it all up, you simply tighten rates a bit, and things level off. That policy worked okay when this country was a tight, almost veritcal economy. Now the lag effects created by the global economy make liquidity flow more like water. It has to be soaked up... When the inflationary pressures being built into system comes a cropper, it will A) be an inopportune moment, probably in the midst of an expansion, and B) it will not respond to the Feds standard tinkerings.

    "Everything is chrome in the future..." Sponge Bob Square Pants

    by agent double o soul on Mon May 22, 2006 at 04:32:37 PM PDT

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