Biotech Valuation | Stock Discussion Forums

To: BulbaMan who wrote (38138)	4/17/2012 11:27:01 PM
From: Biomaven	of 40260

>printing money instead of taxes Basically that means you are taxing savers instead of consumers, and so long-term interest rates would be high in this regime. Once inflationary expectations are high, V (the velocity of money) tends to speed up, which exacerbates inflation. So a system like this would tend to be unstable, with hyperinflation always looming around the corner. That said, the European experiment of austerity in the face of recession is doomed to failure in my view. They need to be printing money and Germany in particular needs to start running a deficit. The stickiness of wages makes some degree of inflation desirable. Peter

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To: Biomaven who wrote (38148)	4/18/2012 12:01:55 AM
From: hmpa	of 40260

The claim was that the interest rate subsidy was substantially cheaper for the Treasury. Theoretically in an efficient non-stressed market the subsidy should exactly match the tax paid by the median bondholder. In reality, the only empirical example they had were BAB bonds that had been launched into the highly fearful and stressed muni market, and sometimes were selling at a lower yield than the actual munis thanks to the explicit U.S. guarantee, so the subsidy had been miniscule. Adding insult to injury, in normal conditions large portion of such fed-sponsored bonds will be purchased by the foreign investors (fed guarantee but higher yield than Treasuries) who will get subsidy but do not pay tax.

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To: Robert C. Jonson who wrote (38152)	4/18/2012 8:41:36 AM
From: IRWIN JAMES FRANKEL	1 Recommendation of 40260

>> So the original reason for making Munis tax-exempt was unneccessary, or even flawed, in your opinion? No. I think the environment changed radically. Go back 30 years or more and the US was capital constrained. Money was dear. States and municipalities were far weaker relative to the federal government. Thus, some incentive was called for. That is no longer true. Going even further back there was a philosophical issue with the Federal government burdening the state fund raising ability by taxing interest paid by the state or flipped the states taxing the Federal interest payments. (We seem to have moved beyond that - though I am not sure why.) Bottom line, IMO, is that the exempting of muni income from taxation is no longer necessary or good policy. For those who concede a need for the Federal government to raise more taxes, taxing muni interest is an easy and significant step in raising revenue. ij

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To: IRWIN JAMES FRANKEL who wrote (38153)	4/18/2012 8:54:55 AM
From: Robert C. Jonson	1 Recommendation of 40260

It seems like a big problem with (IMO) out-of-control government spending is that government spends money which isn't theirs. If it were theirs, the spending pattern might be much more frugal. I think it would be worth considering to cut taxes by a third and divvy up the revenue by 635 and make that the salary of our Congress. Their pensions would be stopped and their retirement funds would consist of any money they saved the American taxpayer over the course of their career. If they had to spend their own money, we might see a vast improvement in effective government expenditures. Edit: we might even see a budget from Congress again.

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