can you increase aggregate demand without decreasing interest rates or reducing gov

[morganist]

Quote from kxvid:

You give the example that a richer person has a propensity to consume 1 paying £100 in taxes. Also that a poorer person has a propensity to consume 0.7 paying £70 in tax.

You argue that if you increase taxes on the richer person, and decrease taxes on the poorer person aggregate demand will increase. What makes you think the wealthy person will still consume @ 1 if you increase their taxes? They will naturally have less money to spend.

It is safe to assume that a poorer person consuming @.7 will increase their consumption if they are taxed £15 less. But any increase in aggregate demand due to this increased consumption by the poorer person will be offset by the reduced consumption (due to a £15 tax increase) of the richer person. Aggregate demand would likely actually fall under your proposal due to a reduction in wealth concentrations.

i explained this on the other page.

my position is that for small amounts it will not alter that much. also there are other factors explained than income like culture age etc. some people will spend everything no matter how much you give them. especially now.

thank you for your responses they are interesting and i will consider them.

random capital i will research what you said. note however it is a different time now and situations are different.

 

[Daal]

If the central bank credibly threatens to destroy the currency, aggregate demand will rise as people will fear tomorrow's inflation and spend today

 

[morganist]

Quote from Daal:

If the central bank credibly threatens to destroy the currency, aggregate demand will rise as people will fear tomorrow's inflation and spend today

i respect your view. however it is unlikely it will be an instant collapse. it will be gradual and unexpected (by most) so they will not all have fear at once. some have been predicting this for years they were wrong years ago so who knows. also most people are two pay checks from bankruptcy so could they spend that much.

i suggest this because the alternatives are not working. i suspect the stimulus will fail so this is a contingency. don't even if previous implementation failed it is different now a different culture plus the situation is dire.

thanks for replies.

 

[morganist]

regardless of the the other aspects of this post has anyone had a look at my taxation program.

i would appreciate feedback.

 

[Daal]

Quote from morganist:

some have been predicting this for years they were wrong years ago so who knows

I'm not referring to actual currency collapse I'm referring to the central bank threatening to destroy the currency. Imagine if bernanke went to make a speech and said 'The Fed does not have an exit strategy, we are targeting 5% CPI inflation for the next ten years, we will increase our QE purchases to unlimited amounts, that means every single marketable UST bond and agency MBS, we might also buy all muni bonds in the market'

Inflation expectations would go to the moon, gold would hit $1100 within minutes, TIPS would soar, velocity would rise and this would increase aggregate demand

 

[morganist]

Quote from Daal:

I'm not referring to actual currency collapse I'm referring to the central bank threatening to destroy the currency. Imagine if bernanke went to make a speech and said 'The Fed does not have an exit strategy, we are targeting 5% CPI inflation for the next ten years, we will increase our QE purchases to unlimited amounts, that means every single marketable UST bond and agency MBS, we might also buy all muni bonds in the market'

Inflation expectations would go to the moon, gold would hit $1100 within minutes, TIPS would soar, velocity would rise and this would increase aggregate demand

is this likely to happen and even if it was. isn't my suggestion one way of avoiding this.

thank you for your explanation though i was unsure.