It was a time of a Republican administration waging an unpopular war. It was a war some Democrats said they opposed but seemed to do very little to stop. Inflation was starting to become a problem. There were calls for price controls on gasoline and many other items. The Republican president increased domestic spending but never enough to please the Democrats. FULL ARTICLE
Source link: http://archive.mises.org/5076/george-w-bushs-nixonomics/
George W. Bush’s Nixonomics
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Great article! Thanks! Bush and other conservatives betray their Keynesian roots in their fetish for tax cuts, also. As I understand supply-side economics, the original idea was that federal tax receipts followed a quadratic curve with an optimum rate. Supply-siders thought that we were above the optimum tax rate and could increase revenues by reducing the rate. However, today it has morphed into the idea that tax cuts stimulate the economy. Keynes argued that the federal government could stimulate the economy by tax cuts, increased spending, or increasing the money supply. Conservatives have latched onto the tax cut aspect and beaten it to death.
It’s true that a smaller government stimulates the economy, but not for the reasons conservatives argue, which is that tax cuts put money in people’s pockets and therefore boosts the economy in the short run; that’s pure Keynes. A smaller government stimulates the economy, but in the long run only, because individuals are more productive and efficient with their own money than the government is.
However, if you cut taxes without cutting spending at the same time, assuming your at the optimal rate, you create deficits, and deficits are not tax cuts; they only delay the taxes for future generations.
I’m thinking that the big problem this time arround will be derivatives contracts. In a normal market they can be used very effectively as leverage, risk managment, and because they are trading contracts and not securities they have some huge tax advantages. However, every time there has been a default, the fed has hapilly come along and bailed them out for the sake of the system. This sends the message loud and clear that mega banks can be reckless with derivative risk, and also creates a situation where people are rather lax about the details and fine print of the contracts.
With trillions, if not hundreds of trillions (notational) in hyper-leveraged derivatives, it could very easially set things up for a systemic collapse. All it would take is a few trillion in defaults and a nice fed bailout to make sure that the stagflation that took 10 years to culminate in the 70′s takes 10 days in 2006 as markets arround the globe dump dollar based holdings.
I can see it now, where they blame the collapse on greedy traders and insist on government required approval for any contract people make, or even worse, government owned securities markets. I can see it now, where governments arround the world desperate to shift focus away from their collapsed economies wage war on each other.
Well, for Bush the future is NOW. No government can sustain two wars, new entitlements and a much larger regulatory system without sooner or later falling into recession.
It is kind of ironic that the Bush re-election sacrificed the entire party. I say good, this whole Nixon-Ford-Bush-Bush philosophy always fails.
It was a time of a Republican administration waging an unpopular war. It was a war some Democrats said they opposed but seemed to do very little to stop. Inflation was starting to become a problem.America’s allies thought our president’s economic and political polices were flawed and they were often ridiculed. Anti-Americanism was popular. The Republican president infrequently disagreed with Democrats about the welfare state. Nixon was a “moderate” Republican. Here was another compassionate Republican of the Dewey/Eisenhower/Theodore Roosevelt wing of the GOP. But Nixon — later impeached for his Watergate shenanigans — was worried about re-election. Nixon, like Bush, decided to shake up his cabinet. The story of price controls begins, as it usually does, in wartime. A government can’t pay the bills through direct taxation and tries inflation. Soon, its trading partners and some of its citizens realize what’s happening and start dumping its currency Nixon — like Bush today — would not cut expenditures or suggest tighter monetary polices to keep spending and inflation under control. Nixon’s celebrated Social Security expansion included a cola provision without serious consideration of the long-term effects, just as President Bush likely has underestimated the costs of his drug prescription plan. This is another entitlement whose costs will burden future generations. .I have done a lot of researches for my dissertationIt was a time of a Republican administration waging an unpopular war. It was a war some Democrats said they opposed but seemed to do very little to stop. Inflation was starting to become a problem.America’s allies thought our president’s economic and political polices were flawed and they were often ridiculed. Anti-Americanism was popular. The Republican president infrequently disagreed with Democrats about the welfare state. Nixon was a “moderate” Republican. Here was another compassionate Republican of the Dewey/Eisenhower/Theodore Roosevelt wing of the GOP. But Nixon — later impeached for his Watergate shenanigans — was worried about re-election. Nixon, like Bush, decided to shake up his cabinet. The story of price controls begins, as it usually does, in wartime. A government can’t pay the bills through direct taxation and tries inflation. Soon, its trading partners and some of its citizens realize what’s happening and start dumping its currency Nixon — like Bush today — would not cut expenditures or suggest tighter monetary polices to keep spending and inflation under control. Nixon’s celebrated Social Security expansion included a cola provision without serious consideration of the long-term effects, just as President Bush likely has underestimated the costs of his drug prescription plan. This is another entitlement whose costs will burden future generations. .I have done a lot of researches for my dissertation http://www.coursework4you.co.uk/sprtpoli6.htm ,but your article give me some more ideas for my next project. Thank you.
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