Upper middle class people can't really do venture capital or private equity (well, they can if they get accredited, but these also require a lot more knowledge and time), bond yields and interest rates are so low, and our retirement system essentially requires chasing inflation-beating yields to work, so they have no choice but to participate in bubbles.
Well known the Fed is pumping liquidity into the market for last few months through the Repo market. Plus cutting the Fed rate twice last year since the recession.
Companies are engaging in stock buybacks. When there’s fewer shares in the market the share price goes up.
The bad faith arguments for trickle down economics and the myth of tax cuts automatically generating enough economic growth are just that: myths, that have been debunked.
This is what makes me especially excited for the possibility of a Warren/Sanders Administration. Republicans will run the economy to the ground; we need a player in the economy that is concerned not just with short term profit maximization but long term investments in society.
trickle down economics and the myth of tax cuts automatically generating enough economic growth are just that: myths, that have been debunked.
This one is easy to debunk. Deficits have gone up with every tax cut since Reagan and they never came down much. Trickle down also doesn’t seem to work with upper incomes rising while lower incomes are stagnating.
Deficits are income minus expenditures.
If expenditures are increasing faster than income (regardless of how fast income is growing), then there will always be deficits. A better measure would be to look at income (aka tax revenues) which usually come from productive economic activity.
Your analysis is closer "eating vegetables makes you fat!" while ignoring that you're eating three desserts after each meal.
You might want to start your reading with this very widely reported 2015 IMF report: https://www.imf.org/external/pubs/ft/sdn/2015/sdn1513.pdf
First article about this report search brought up, in case you want a slightly lighter introduction is, though you should find dozens of other media articles on the report: https://psmag.com/economics/trickle-down-economics-is-indeed...
Never encountered this site before so know nothing of their editorial stance, though I can conclude they are not pushing the boundaries of the laissez-faire right. :)
Now most economists (including a recently published and definitive 65 year study of tax cuts) will tell you that those tax cuts did NOT cause the economic growth.
This is a case of academics fighting what people saw with their eyes and felt with their pocket books, so this argument will never die no matter how many papers are published "debunking" it. I have a hard time believing the economists myself having lived through all but Kennedy's tax cut, but it may be so.
Also, the person above was not talking about trickle-down, which is easier to debunk. I would definitely agree it is pretty clear that in most all cases the rich get richer when taxes are substantially lowered and very little trickles down. Trickle down is easier to "disprove" than a connection between tax cuts and growth.
Kennedy's tax cut and resultant economic growth appeared to help the middle class more than the others, but that was before we went off the gold standard and productivity and wages rose together.
And yes what happened in Kansas is sad. You can have very low taxes, but without something to attract talented people and businesses to your state, they don't do much good. No one is going to relocate to the middle of nowhere just to enjoy a modest tax benefit, and if you are a corporation you will likely just incorporate in Delaware anyway so why bother with Kansas?
> This is what makes me especially excited for the possibility of a Warrens/Sanders...
My friend, I’d like to suggest some historical reading about the dangers of central planning, socialist/communist governments....
Like, wouldn’t I prefer that money to go towards the actual funding of the company’s projects?
I’m not aware of any form of “investment” that allows a casual investor (someone who isn’t a millionaire) to actually deploy that capital towards production.
The problem is that this would make the company too responsive to the needs of investors rather than its markets.
The corporations power is delegated via its shares but its value is derived from the markets it serves. It’s in the interest of shareholders (who passively invest in it) for the corporation to judge projects based on what the markets think are valuable. Neither the corporation nor the shareholders know exactly what that may be, but the corporation spends more time and effort trying to get a good answer than the shareholders do. So the shareholders leave everything beyond the most drastic decisions (sell, close the company etc) to the corporation.
Otherwise, when buying shares, someone in the distant past did invest into the company by buying shares they issued. You are just taking over their share of the company. Which makes you now the one who provides equity to the company.