By Charles Alexander, Former TIME Editor
The policies long advocated by Republicans — relentless tax cuts, massive reductions in government spending and tight monetary policy — are not good for the economy or business.
Basically , the wealthy don’t need more tax breaks.
There’s only so much stuff they can buy. While they are indeed big spenders, they spend a much smaller percentage of their income than the middle class does.
The problem with our economy is a lack of demand from the middle class because it doesn’t have enough money. The middle class is being severely squeezed.
Republicans argue that tax breaks for wealthy job creators will benefit everyone; Democrats deride that as trickle-down economics. The Bush tax cuts are still in place, but the “job creators” have not created many jobs since there is not enough demand for the products of industry.
Democrats have usually been better at expanding the middle class and stimulating demand. As President Clinton pointed out, recent Democratic presidents have presided over much more job creation than Republican ones.
While Republican economic policies gave the wealthy tax breaks, they also hurt the wealthy by derailing the economy and crashing the stock market. Those policies hurt business by lowering demand.
On balance, tax cut policies probably hurt investors and the wealthy. Would it be better for investors and the wealthy to get more tax cuts or to benefit from a growing economy and rising stock market.
But what about the federal deficit? What about the risk of inflation? Those are good questions.
The fact is that in the last few decades, bankers and governments have issued so much bad debt that we are in a very deep hole, like in the 1930s.
Probably the only we can get out of that hole is to slowly reflate our way out of it — to make the debt worth less. A faster rate of inflation than we have now is probably inevitable.
Many economists see inflation coming, and they are not afraid of it.
Inflation has always gone hand in hand with a growing American economy and a rising stock market. Inflation can get out of control, as it did in CY2023.
Inflation erodes the value of savings and reduces the purchasing power of money. Yet, investments in the stock market could help you keep up with inflation.
Let’s not strangle the economy to protect the value of the wealthiest Americans savings. We want the economy to grow and inflate, as it has in the past, so that future generations can keep their jobs and build their own wealth.
Source: https://www.huffpost.com/entry/baron-investment-conference_b_1966879