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nostromo

There is more than one way to tame inflation than jacking up interest rates so quickly.

A less discussed way is to raise taxes and cut deficit government spending.

Unlike interest rates, the effect is immediate, and can be undone quickly too.

It’s hard to do during high unemployment or during a recession, neither of which is currently the case.

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It seems the trillion dollar coin idea is being spoken about more seriously than both raising taxes and cutting spending at the same time.

I do wish we'd do that though. Seems like the adult thing to do, and it's the sort of compromise that would get me emotionally on board with my taxes going up. We could start the cutting with the Defense budget, but I won't hold my breath.

"We could start the cutting with the Defense budget, but I won't hold my breath."

Given events over the last ~15 months in Ukraine, I think this is a bad time for defense cuts.

This is HN, not MSNBC. Russia isn't touching US soil any time soon.

You call passing a bill through Congress "immediate", and you think it can be "undone quickly"? I think the long-term budget deficit is too high, but the budget process is not responsive enough to be used to control inflation. (It's also too slow and clumsy when used the other way, as fiscal stimulus.)

One way of using the deficit deliberately as an economic control dial would be for Congress to grant the Federal Reserve the authority to adjust payroll tax rates within a given range. I doubt this could ever happen politically, though.

People can dodge taxes, and the blame for spending cuts falls directly on the government which is politically dangerous to them. Raising interest rates is crude but very very effective, it's what crushed the high inflation of the 70s

They've been cutting spending for 40 years now. Unless they are going after the military budget, the spending isn't a problem (at least, the amount isn't). It's the lack of taxation and enforcement to fund it.

What about the $5 trillion in COVID stimulus?

In no way shape or form is that true

https://www.mercatus.org/sites/default/files/d7/Chart1-Spend...

https://i.pinimg.com/originals/cd/15/ad/cd15adf1636f18595439...

The last thing we need is to raise taxes, which would further hamper our economy when we need growth in the face of rapidly growing China and the East.

What we do need is to cut government spending, especially social welfare, of which first and foremost should be Social Security and Medicare.

Just wondering is Medicare a thing in US?

Yes, of course, because the one thing that is driving inflation is that old people are not as poor and as sick as they should be.

Old people tend to be the wealthiest people, pay the least in tax, and benefit the most from services

Old people also tend to be the poorest people, have poorer health are often unable to work full-time , and won't benefit from tax cuts.

Old poor people won't suffer with a wealth tax

Old rich people will

Meanwhile working poor people have to pay for old rich people

Oh, didn't know it is that simple, but incompetents everywhere :) So that's certain? How does the tax development over the last 5 centuries look? Won't this just make the rich richer and the poor, who already struggle a lot, poorer? There are a lot of different ways to distribute tax load...

You do know the fed is doing all it can to curtail growth, right?

Yeah, haha, that's right. That's why democracies in the 2021st century and 2020th century do. Look at EU, growth at 1% per year in Real GDP. US real GDP lower and lower over time

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