Friday, June 11, 2010


There are consequences to changes in the tax code and the regulations governing the economy. As our politicians manipulate the marketplace people react to their string pulling like puppets with souls and minds, making decisions meant to thwart the machinations of the puppet masters. The political decisions made by people that have very little understanding of their affects cause distortions with potentially serious portent.

Or, perhaps the puppet masters understand what they're doing all to well. Maybe they've purposely made changes to pull forward growth coming into an election to benefit themselves, cementing their hold on power. Perhaps they believe that two more years of Progressive control of the government will be adequate to so totally integrate their system into ours that we'll never get rid of it. And, maybe a financial collapse after they've won reelection would help them to force their agenda on us.

Never let a crisis go to waste.

From Arthur Laffer at the
Wall Street Journal:

"...Now, if people know tax rates will be higher next year than they are this year, what will those people do this year? They will shift production and income out of next year into this year to the extent possible. As a result, income this year has already been inflated above where it otherwise should be and next year, 2011, income will be lower than it otherwise should be.

Also, the prospect of rising prices, higher interest rates and more regulations next year will further entice demand and supply to be shifted from 2011 into 2010. In my view, this shift of income and demand is a major reason that the economy in 2010 has appeared as strong as it has. When we pass the tax boundary of Jan. 1, 2011, my best guess is that the train goes off the tracks and we get our worst nightmare of a severe "double dip" recession.

...Consider corporate profits as a share of GDP. Today, corporate profits as a share of GDP are way too high given the state of the U.S. economy. These high profits reflect the shift in income into 2010 from 2011. These profits will tumble in 2011, preceded most likely by the stock market."

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  1. This is done, Catawissa, solely to influence the outcome of the November election. I hop, however, that the American people prove smarter than their puppet masters. But the election of Obama in 2008 seems to indicate that that is not the case. Despair is a sin, and I am guilty as charged.

  2. I'm working 24/7 to bring a little sunshine into your life with all this good news, aren't I?