The trickle down economics of Reagan\/Bush\/Bush actually works, but not in the way they would want to explicitly explain.<\/p>\n
During the years of economic boom, the RBB team kept cutting taxes and running huge deficits.\u00a0 The theory was that all this money given to rich people would eventually trickle down to the poor and everyone would benefit.<\/p>\n
During that time the labor unions were attacked and government actions kept weakening them.<\/p>\n
Of course outsourcing jobs to developing countries also dampened the demand for increased salaries in this country.<\/p>\n
The result of this program of attack was that the people who depended on a salary for their income did not get raises to match the cost of living.\u00a0 Instead they got the right to borrow money at sometimes easy terms and sometimes not so easy (think credit cards).<\/p>\n
Since the economy was already going at full speed ahead when the RBB economic stimulus of tax cuts was enacted, there was not much in the way of additional physical goods that could be produced to sop up this additional spending.\u00a0 The rich couldn’t spend their money fast enough buying luxury goods like mansions, yachts, cars, to use up all the money they were getting.<\/p>\n
Rather than park this excess money under their mattresses, they “invested” their money in the invention that Wall Street came up with to satisfy the need for doing something with the excess money. One of the inventions was the financial derivative.\u00a0 These could be made with relative ease in almost unlimited supply.<\/p>\n
This Wall Street Ponzi scheme only needed home loans as a thin veil to cover the fact that these were phony investments.\u00a0 So they made it easy for the salary earners to get loans.\u00a0 They encouraged the borrowers to make up any justification that was needed to qualify for a loan so that Wall Street could package up the phony loan and sell it to investors.<\/p>\n
As long as this Ponzi scheme could keep going, the borrowers took their borrowed money and spent it like it was a second income.\u00a0 It did not dawn on them that they weren’t actually getting added income, they were only borrowing the income.\u00a0 They didn’t really own the house, they were just borrowing it.<\/p>\n
Everybody was happy.\u00a0 The housing industry boomed.\u00a0 Tax collections by the government even went up due to all this phony economic activity.\u00a0 It didn’t go up fast enough to pay the government’s bills, but who cared?\u00a0 Reagan\/Bush\/Bush appeared to be geniuses.<\/p>\n
The first little glitch in the rosy scenario finally woke up some people who stopped supplying money to the Ponzi scheme.\u00a0 A few people stopped giving money to Wall Street to invest in their phony derivatives.\u00a0 The whole house of cards came tumbling down.<\/p>\n
The salaried earners got the rude awakening that borrowed money is not as permanent as earned and saved money.\u00a0 The wealthy even learned that all that money they got from the government in the form of tax cuts and they got from the workers as interest on the money they lent them was only on paper. Trillions of dollars of wealth disappeared over night.<\/p>\n
The rich had to forgo a mansion or two or perhaps had one less yacht to sail on.<\/p>\n
The workers had fewer meals to eat and no roof over their head.\u00a0 They couldn’t afford the doctors and medicine so some got sick and some even died.<\/p>\n
Now the workers yearn for the good old days of the RBB years.\u00a0 What do you suppose is going to happen if they succeed in electing politicians who promise to take them back to those years?<\/p>\n","protected":false},"excerpt":{"rendered":"
The trickle down economics of Reagan\/Bush\/Bush actually works, but not in the way they would want to explicitly explain. During the years of economic boom, the RBB team kept cutting taxes and running huge deficits.\u00a0 The theory was that all this money given to rich people would eventually trickle down to the poor and everyone […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[166],"tags":[],"class_list":{"0":"post-4499","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-stevegsposts","7":"czr-hentry"},"_links":{"self":[{"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/posts\/4499","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/comments?post=4499"}],"version-history":[{"count":4,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/posts\/4499\/revisions"}],"predecessor-version":[{"id":6010,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/posts\/4499\/revisions\/6010"}],"wp:attachment":[{"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/media?parent=4499"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/categories?post=4499"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/tags?post=4499"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}