UnThreaded | Threaded | Whole Thread (63) | Ignore Thread Prev | Next
Author: Jim2B Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 137228  
Subject: Re: Best move for Republicans Date: 11/18/2012 11:58 AM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
No, that's not how it works. All asset prices are marginally higher (possibly), meaning that everyone pays and gets higher prices for their assets, not only the guy who got the tax cut.

Actually, that is not how it works.

You play around with averages and equilibrium concepts but the market definitely does not work that way.

You might buy a car with your tax break. I might buy new windows for my house. In each case we invest our money in what we perceive to bring us the highest value for the money spent. In my case, that would be reduced energy bills. In your case it might be decreased fuel bills.

In each case we receive (or at least perceive) a return greater than our investment! This is almost always true.

The government also works on averages and equilibrium concepts and CANNOT make the correct decisions for us. Instead it invest in green energy companies (which go bankrupt) and automobile makers (who lose value). Investments made by the government almost always destroy wealth by earning returns less than the investment.

Here's a simple rule of thumb, not always true but on average it is true:

Government investments of $1, return < $1
Private investments of $1, return > $1

Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (63) | Ignore Thread Prev | Next


Foolanthropy 2014!
By working with young, first-time moms, Nurse-Family Partnership is able to truly change lives – for generations to come.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Macro Economics

Looking at Currency Ratios
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.