(Original post by Markleberry)
Sorry, I tend to take people knowing my position on the deficit for granted. 'Tis a bad habit. I stick to the Reinhart/Rogoff limit of public debt/GDP of 90% (where it starts to affect the economy as a whole), so I really don't give a damn about our debt piling up. We can afford one more year, and that's all I want. One more year of stimulus spending (albeit partially offset by cuts and taxes elsewhere, to about 75% of the stimulus value). As for rates rising as a result, I'm banking on the commodity bubble bursting (with a resultant flight to sovereign debt investment) and on markets realising that another stimulus is going to be necessary. Those two things aren't as unlikely as you think.
Corp. tax is already being cut back, so why would I mention it?
Now this I did not know. Many thanks for pointing that out.
Low input costs = lower total costs. lower total costs = higher total profit. Higher total profit = more money on investment.
As I said, already being cut, so I don't really care. I suppose you could achieve the same goals on the investment front with a targeted break for the manufacturing sector,
Again, didn't know. Thanks for the info though.
EDIT: Looking back, I'm not sure if you're talking about the overall VAT cut, or the manufacturing one. If it's the former, then I'm not bothered, as that cut is only really there to help consumers - the effects on firms are irrelevant. If the latter, then hopefully it'll lead to some larger investment projects with the increased profits, what with economies of scale and whatnot.
I can admit that seems a little confusing. Artificially inflating the price level with VAT doesn't really count as stopping deflation - you've changed the figures but not the underlying fact of either too little demand or too much supply, which is still going to cause problems. However, placing unnecessary pressure on real wages when consumers are trying to deleverage is also unnecessary, and in this case VAT does 'count'.
I didn't know that either, surprisingly enough.
I'm afraid I have to disagree with you there - I know that already. As for being pointless - what about consumer confidence?
If you look back, I did a piece on this
earlier (paragraphs 6 to 9 are the relevant bits). I am entirely aware of the causes.
Just to make this clear, I only care about the pseudo-inflationary effects of VAT on households insofar as they slow down consumer deleveraging. Once that's out the way, jack it up as far as you want because it won't really matter (well, don't; it's a regressive tax, but you know what I mean). But if you try and shrink the government while households are shrinking, firms are going to shrink, and that causes recessions.
Oh, and as for 'the continuing growth of the economy'... I'm afraid I disagree with you entirely. Shizz is going to go down sometime in 2012.
Regardless of all that, it's nice to meet such an obviously intelligent poster as yourself. I look forward to debating with you.