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What sort of nonsense are you spewing?And by the way FDR oversaw the two worst Depressions in the last 100 years.
All of that said, Ritholtz is probably right that corporate tax cuts should benefit the stock market. Corporations and wealthy stock holders are precisely who the cuts are designed to help. The fact that the cuts are working in that regard shouldn't come as a surprise. They increase corporate profits after taxes by default. Yet whether the rally from the cuts is overdone at this point is another question entirely. Valuations matter too. And conflating the stock market's performance with the health of the overall economy is a gross distortion of the truth.As Greg Mankiw, a Harvard economics professor, explains in a summer 2010 edition of National Affairs magazine, Keynes believed that "extreme and sustained unemployment during a recession" is fundamentally the result of "a decline in overall (or aggregate) demand in the economy." The government can "help restore normalcy" by increasing demand through spending, writes Mankiw. "And because the influx of government spending drives businesses to hire and consumers to spend, its impact is multiplied."
According to classic Keynesian theory, government spending increases have a higher "multiplier" than tax cuts, because individuals might choose to save the money from tax cuts, rather than spend it.
Is there data to back up Keynes' -- and, by extension, Rachel Maddow's -- argument?
Yes, but there's also data that certain types of tax cuts can have a similar impact.
To start out, we turned to testimony by Mark Zandi before the Senate Finance Committee on April 14, 2010. Zandi is the chief economist for Moody's Economy.com and a former adviser to Republican Sen. John McCain during his 2008 presidential campaign. Page 5 of the testimony contains a table that summarizes Zandi's calculated "bang for the buck" for various fiscal stimulus programs. Spending $1 on unemployment insurance benefits, for example, increases the GDP -- the value of goods and services that the economy produces -- by $1.61 a year later, according to Zandi. (We found some counter-arguments in a previous Truth-O-Meter item checking New Hampshire Sen. Jeanne Shaheen's use of Zandi's data.) A temporary increase in food stamps has the biggest stimulative effect. For each dollar spent, GDP grows by $1.74 one year later. For spending increases as a whole, the "bang for the buck" ranges from $1.13 for the Low-Income Home Energy Assistance Program to $1.74 for food stamps.
The former economist for the GOP presidential candidate also looked at the stimulative effect of tax cuts. Making the Bush income tax cuts permanent has a multiplier of 0.32, which means that for every dollar the government cuts in taxes, GDP grows by $0.32. Cutting the corporate tax rate also has a multiplier of $0.32. According to the chart, the most stimulative tax cut initiative would be a job tax credit, which has a multiplier of $1.30.
So based on Zandi's research, Maddow is on solid ground. All but one of the spending programs that Zandi analyzed have a multiplier significantly higher than one. The highest multiplier for tax cuts is $1.30.
I used to suggest that people don't move money out of load families once they've paid the load. It's a sunk cost; you might as well get something out of it (the ability to do exchanges at NAV). But as I noted above, many families, including Oppenheimer, are making (most of) their front end load funds available NTF through supermarkets.I paid a load to buy Oppenheimer’s new fangled commodities fund back in ‘96 or ‘97. It did very well for several years (double digit gains) before crashing and burning. Now it’s long since eliminated from their store of funds. I’m left with some Class A shares there spread out currently among 5 different funds (kind of like a breakfast buffet at a mid-priced hotel chain) - a little bit of everything. I can’t recommend the company or its funds. But I cling to my A shares 20+ years after buying them direct. I’ll say one thing about Oppenheimer: They do have some unique fund offerings in areas many companies don’t care (or dare) to venture into. Just one perspective. FWIW.
5) Pony up $3K to buy the A shares NTF, e.g. PONAX:So the small investors can:
1) put up the money for I class shares
2) go through an advisor
3) buy the loaded A shares (for the new investors, not the converted D share investors ).
4) buy the etf BOND which is a more tax efficient structure than the mutual fund.
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