While Joe Biden - Barack Obama's Vice Presidential running mate claims that U.S. tax rates will be raised, we have to question about whether the government is using their tax dollars the right way.
As we all know, recently the government has agreed to bail out AIG - the world largest insurer - for $85 billion in exchange for a nearly 80 percent stake in the company. The pay back date is set 2 years from now.
Do you think the government is using US citizens' tax dollars efficiently?
AIG made wrong decisions and they have to take their responsiblities. Not to say their budget spending in the recent years were ginormous, they even paid a billion dollar to advertise on the jersey of English soccer club Manchester United 2 years ago. And now the Fed authorized the Federal Reserve Bank of New York to lend up to $85 billion to them.
Will this make inflation increase dramatically as we have too much money on the market?
1 comment:
I hesitate to say where the "new" tax dollars will go to. However, I do not think a tax raise at this point is a wise move. With the current recession in the economy (what is happened in the financial market is believed to be even worse than the Great Depression, so are we closer to another depression now?), such a move will decrease consumer spending and slow down the economy even more.
Another thought regarding inflation. Even thought the Fed just infused $85 bil to bail out AIG, I don't think this shows an increase in MS, just because this money will pretty much go straight to pay back debts. Furthermore, the consumer confidence level is apparently not so high. The unemployment rate, on the other hand, is very high (w/ the Lehman Brothers' employees who just lose their jobs, the unemployment rate would probably increase more). As we are all alerted of the current economy situation, i don't think consumers would be so interested in spending -> inflate prices. This shouldnt be a major concern for now.
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