The Basis of the Economy

Some people question why I feel there should be higher taxes on the wealthy, even if temporarily.

Well try to follow this:

For years we have been an ultra-consumer society.  We bought beyond our means.  Some of this was greed, some of this was advertising.  Some of it was trying to keep up with the Joneses.  Some was pushed on us (remember one way were supposed to react after 9/11 was to go out and keep buying things like nothing had happened...) and some we brought upon ourselves (I deserve a new car). 

So we kept spending.  We ran up credit card debt, home equity debt, we even borrowed from our 401K to make ends meet.  Yes the economy did well - but it was all based on a bill that had to come due soon.  So, the companies had their money - right from the bank - but where did the bank get it?  From the IOUs that we gave them.  When the day of judgment came and we decided we didn't want to spend anymore, the house of cards came down.  When we decided to keep that car one more year and not buy a new one, auto sales dropped.  When we decided the house we were in was big enough, new home sales stopped.  When we decided to stay home rather than go out to eat, restaurant sales slowed.  In each business, less sales equaled less workers needed.  Less workers means less people with money and less sales.  And the spiral begins.

Now when does it stop?  When all the debt accumulated gets paid down, written off,  or blown away.  When people, not businesses, feel comfortable in spending money again and then instead of a downward spiral, you have a climbing flight.

Now how can the wealthy help?  Well the reason they have the money is that we traded it for debt.  Now depending on who you feel is right or wrong will determine your solution to the problem.  But anyway you look at it, if money does not move from the wealthy to the debtors, the economy will not grow.  How and  why is not for this post.  But somehow we have to figure out how to do it.

ChrisZ