Blew up in her face and caused a financial meltdown in the UK. And inflation is at 10% there. What made her think that unfunded tax cuts would would be a good idea right now? I guess she finally got her big chance and immediately wanted to implement her nonsensical ideology so she could be just like her heroes Reagan and Thatcher. Her approval rating is now around 10%. Opinion | They Believed in Markets, but the Markets Did Not Believe in Them The British pound dropped to its lowest value against the dollar, and the Bank of England had to intervene to save contagion from spreading into the pension system and beyond. The stakes of the crisis were global size. Strangest of all, this was done purposefully, in a reckless act of deliberate policy, better thought of as a gesture of political conviction. There’s something tragicomic, if not tragic, about capitalist revolutionaries Ms. Truss and Mr. Kwarteng laid low by the mechanisms of capitalism itself. Ms. Truss and Mr. Kwarteng may be the last of the Thatcherites, defeated by the very system they believed they were acting in fidelity to.
That could be the dumbest opinion piece ever or OP Title… The tax cuts are not causing inflation. The government spending on the other hand…
Right, stimulating the economy with tax cuts not accompanied by corresponding spending cuts, thus increasing deficit spending, is a great idea when inflation is running at 10%.
The late 70s were a different time than now. In the UK many things had become socialized. In the US the tax cuts didn’t come until the economy was in the toilet. Plus at least there was an attempt and lip service towards cutting spending with Reagan. Obviously the markets balked this time at the completely non serious proposal to cut taxes with no spending cuts in the face of inflation.
they rolled those back and now a second high ranking official in her cabinet has resigned over, of all things, using her private email... UK's Truss drops tax cuts, axes Treasury chief amid turmoil | AP News Senior UK minister resigns, dealing Liz Truss another blow | The Times of Israel
Honest question. I'd love for someone to link me to anything that shows supply side economics being effective in a real world setting. And I say this as someone who studied Econ and will nerd out and read random econ stuff.
It was effective when it started because of basic math - it’s effective at the ends of the chart. But we’ve long since passed that point. When tax rates were as high as 90 percent, you could cut someone’s taxes by 11 percent down to 80 (1/9th). Their net income effectively doubled and would ripple through the economy as such amplifying the gain, and the government only lost 11 percent. So it made a lot of sense. But once you get below 50 percent that math no longer works.
Tax cuts are not government spending at all. Tax cuts are allowing people to keep what they earned and the private sector using that will not create the inflation we are seeing. Now government spending will increase inflation. And now we are seeing the interest rates rise to try and slow it.
If you cut taxes and give the private sector more money, that increases demand. Increased demand would increase prices of items, causing inflation. I'm not arguing for or against it, just letting you know the economics of it.
Be careful with that idea. If the British are patient, they will soon realize how quickly wealth is evaporating there.
Huh? I don't even know what you mean by "cheap money" Edit: nevermind I follow you now. That doesn't affect demand. Money in the system is money in the system. Whether the govt is spending it or citizens are, its still demand. Driving prices up
Putin's wealthy oligarchs have been trickling down on the Britain people for years. The government sold their soul to these devils because money is more important to the English and their economy than dignity...and they live beyond their means. Why are oligarchs so necessary in Britain? Because we love living beyond our means | Larry Elliott | The Guardian How Putin’s Oligarchs Bought London | The New Yorker
When you cut taxes but don't cut spending, you create higher deficits. Do you think higher deficits have any impact on inflation?
The term unfunded tax cuts makes me laugh, as if it's not common sense that spending reduce proportionally to the decrease in wage/earnings theft, then reminds me that our resources are really just borrowed from our owners. Sobering thought.
