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Establishment Economists Call for More Taxes on the Rich

Written by Gary North on January 17, 2012

Mark Skousen, an Austrian School economist, attended a recent meeting if the American Economic Association, the professional association of academic economists. He has reported on the views of major Keynesian economists.

The big cannon should be fiscal policy [more deficit spending].” — Peter Diamond, Nobel Prize Economist and New Fed Member

Peter Diamond’s Solution to the Unemployment Problem: Tax (the Rich) and Spend!

Panels are always the most provocative, and usually involved famous people. This year the panels were dominated by Keynesian Nobel Prize winners such as Paul Krugman and Peter Diamond. Diamond was just appointed by President Obama to be a new Fed member. A major topic at this year’s conference was the lousy employment numbers. The unemployment rate is 8.5%, and more importantly, job openings are falling. Apparently the unemployed are dropping out of the labor force and giving up.

He will be in a position to influence monetary policy.

What to do? “The big cannon is now fiscal policy,” Diamond said. He recommended that Washington spend more and run even deeper deficits, preferably on education, R&D, and infrastructure, not foreign wars. And he meant “now is the time to act to get people back to work.”

More than $1.7 trillion a year? Aren’t we risking default like Europe? Apparently not. “There is no imminent debt problem in the United States as there is in Europe,” he responded.

Since he was headed to the Fed, I asked him what he would recommend Bernanke do to stimulate the economy. “Should we inflate our way out?”

“There is no inflation problem today,” he said. Meaning: Get the printing presses going 24/7!

Could government regulation be a problem? Of course not!

I asked Diamond and other experts on why the employment market was so stagnant. Was it due to excessive regulation (ObamaCare, Sarbanes-Oxley, Dodd-Frank, minimum wage)? They said “no” to all these reasons. But higher taxes and unpredictable monetary policy could hamper the recovery in the jobs market. . . .

Diamond is an advocate of a sharp increase in the marginal tax rate on wealthy individuals — to as high as 73%, according to the latest issue of the Journal of Economic Perspectives — and without any loopholes. He says the studies show this high rate won’t hurt incentives. Really?

Diamond is not alone.

ul Krugman echoed Diamond. He told me that the only option left open now is “more massive deficit spending.”

What about the fear that we are headed toward default European style?

“Not a chance,” he replied. “We’re years away.” He pointed out that Treasury bonds are still rising, so there’s no worry. (10 year bond yield is under 2%!)

I pointed to numerous examples of developed countries (Canada, Sweden, New Zealand) that had cut spending and reduced their deficits, and their economies flourished. “Not relevant!” he exclaimed. “None of these countries were suffering from a severe recession.”

Would he favor a cut in the corporate tax rate, as advocated even by Democrats? “No,” he said emphatically. In fact, he supports a tax increase on wealthy Americans, up to 50% without loopholes.

Sadly, these are the kind of economists who President Obama is listening to. Can we afford another four years of tax and spend? It’s scary.

Continue Reading on www.mskousen.com

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8 thoughts on “Establishment Economists Call for More Taxes on the Rich

  1. It is NOT surprising that both Krugman and Diamond are Jews. I used to think it purely coincidental that so many Jews were involved in the financial analysis of our nation, or that Wall Street was so dominated by Jews, but history has shown us what happened in Germany in the last century. Money, gold (gelt), the diamond industry, the publishing world, all dominated by Jews. Like Germany of the last century, in their pathetic economic straits, we ARE SCREWED.

  2. Stockup,
    I have a bit of advice for you. If you don't know history then SHUT UP. Hitler used the propaganda lie that the Jews controlled the financial sector, and publishing etc. He repeated it so often that the majority of Germans came to believe it because this small segment of the total German population made a good scapegoat group for all that had happened in WWI and post-war.
    Paul Krugman and Peter Diamon are both followers of the Keynesian theory of economics. This has been tried and failed,but believers will not give up on it. Spending more to get out of debt is insane.

  3. I never made money from a poor person and if we tax the rich then they just pass it on. If you take more from them where is the insentive to make more money oo yea he want to make it for the goverment sure he does..That sounds like the pay limit when you get a raise everything goes up so you really are the same as before but it sounds better

  4. When are they going to learn? The government doesn't need any more more. The government needs to CUT SPENDING. Is that so difficult to understand?

  5. I have yet to see one of these so called experts just say instead of going to the people for money, I will just write a huge check to the government, nope they will never do that

  6. I don't know why my first reply had to approved all I said was that that I too never made any money from a poor person. And no poor person ever built a million dollar home and when they did it provided at least hundred jobs to the "poor people"
    No name calling or bad words.

  7. They all so rejected the quote that Margaret Thatcher said abut running out of other peoples money. This sites admins is a joke.

  8. MrInterpid says:

    My mother had a term for people like this (keynesians): EDUCATED IDIOTS. People with high dollar snobby educations and not a lick of good sense. I wonder if these people run their home finances like they want the government to run. Maybe some of these morons make six figure incomes and are still scraping along in poverty. Do they spend more than they take in every year? If they are short at the bank do they go on a spending spree to solve the problem? Do they owe for everything they have in spite of high salaries from their ivory tower jobs? In short do these people act as dumb as they sound? My suspicion is that some of them are in debt to their eyeballs and don't see any problem with the rest of us being so as well.