Supply-Side economics. Why?

[victorycountry]

supply side says lowering taxes creates demand. Supply side would typically like to see taxes cut for the consumers and tax payers as well as the elite.

Trickle down seems to imply giving breaks to the elite and letting their consumption and investment decisions do all the heavy lifting for the economy.

They both might work but I would argue broad based well targeted tax cuts would do the most good in most situations. Especially when the elite now make world wide decisions and spend a lot of money buying politicians for an advantage rather than improving products and competing.

True tax cut is aimed to create demand. A good point.

I seriously think Trump will bring better economy. US has the world's largest debt primarily because of huge trade deficit. Trade deficit is caused by companies doing outsourcing. e.g. Apple, Nike etc

Imposing tariff on these companies will make them cut off their foreign labours but this is not a concern to US govt. It will be interesting to see whether tariff will lead to higher inflation which could offset tax cut

 

[CyJackX]

Imposing tariff on these companies will make them cut off their foreign labours but this is not a concern to US govt. It will be interesting to see whether tariff will lead to higher inflation which could offset tax cut

How would a tariff lead to inflation?
Would a tariff lead to trade wars?

 

[cdcaveman]

How would a tariff lead to inflation?
Would a tariff lead to trade wars?

Tarriffs by definition restrict trade typically to cut lower priced goods from the market.. now do some simple addition . What happens to prices when the lower priced goods are banned.....

 

[victorycountry]

How would a tariff lead to inflation?
Would a tariff lead to trade wars?

1) Tariff limits imports - what it implies is
US made products are relatively expensive because of higher labour cost.
Given that a lot of US companies are doing outsourcing, tariff will have negative impact on these companies - less supply could make companies to raise selling price

2) Tariff limits trade wars - it's primary motivation is to reduce competition between domestic firms and foreign companies

relevant article:
http://dailytimes.com.pk/business/2...riff-on-chinese-goods-is-perfectly-calculated

 

[cdcaveman]

How would a tariff lead to inflation?
Would a tariff lead to trade wars?

Now after trumpo blocks trade what do you think the lower priced good countries will do about it??? Subsidize more to compensate. Which in turn shows up in a currency war. This isn't rocket science

 

[CyJackX]

Just asking a question; no points meant.

Do we want a currency war?

 

[cdcaveman]

Just asking a question; no points meant.

Do we want a currency war?

No we don't.. bottom line it hurts both countries... It's just the political class being political entrepreneurs while we are subject to whatever happens

 

[victorycountry]

Just asking a question; no points meant.

Do we want a currency war?

Without imposing tariff, yes, there would be a currency war, given the interest rate rise.
However, with tariff, I don't expect a currency war. It's more like Win-Win situation for America. Trump is a business man, he knows the inside and outside of the business world.

 

[cdcaveman]

Without imposing tariff, yes, there would be a currency war, given the interest rate rise.
However, with tariff, I don't expect a currency war. It's more like Win-Win situation for America. Trump is a business man, he knows the inside and outside of the business world.

Wrong... Tarriffs are a form of protectionism which is exactly what a currency war is

 

[victorycountry]

Wrong... Tarriffs are a form of protectionism which is exactly what a currency war is

Pls shed enlighen me on that, how does it create the currency war ?