When it comes to the alleged “fiscal cliff”, both supply-side and Keynesians are in agreement that jumping off would bring tragic, financial consequences. However, conventional wisdom is almost always wrong, and I believe it’s wrong here. We won’t reach the fiscal Cliff because the incentives that drive politicians to ensure a deal.
With the overall economy still limping, hardly any politicians would want to be on record as having voted to raise rates of taxation. Every person in the home of Representatives is up for re-election in 2014, a third of all senators are, and they’re not going to vote for large tax increases. Considering spending, though it nearly always occurs at the expense of growth, politicians exist to spend our money.
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We’ll never jump from the “fiscal cliff”. For Keynesians like Obama and his advisers, they’re deluded by the fake belief that authorities spending can be an economic stimulant. So automated reductions in spending by the Feds would directly subtract from GDP growth. The Keynesians are right actually. GDP would decline in the near term amid automated spending cuts, but all this tells us is that Gross Domestic Product is a worthless number.
Economies are nothing more than an accumulation of individuals, so when the U is broken by us.S. ‘s easy to see how incorrect the Keynesians are. Indeed, are you better off when the Federal government taxes away your earnings and consumes limited capital that might otherwise fund a future Apple? Well, you’re the economy.
In short, government spending can be an economic retardant. What’s missed by some, however, not all supply-siders, is that we’re in a recession already. GDP is once more a worthless number, but if we take away the economic wet blanket that is government spending from the calculation, there’s very little growth to speak of at all. The FED has injected trillions in fiat published dollars into the overall world economy electronically. This is the classic definition of inflation – currency devaluation. When money is devalued, the size of our paychecks shrinks.
Supply-siders correctly understand that taxes eviscerate our paychecks, however, not understand that currency devaluation achieves the same enough, and that’s why devaluation always correlates with sluggish growth. Devaluation is a tax on work. Tax slashes on income, investment earnings, and dividends are great, but they’re largely irrelevant at this time. Worse, their wonders are being discredited by dollar destruction that began under George W. Bush, which has continued under President Obama. We’re never going to attain the fiscal Cliff given the incentives that drive politicians. Government spending reduces real growth, while tax slashes only work if they’re combined with a strong dollar. Both supply-side and the Keynesians skip the point.
Before sellers give up control of their company in an offer with a corporate buyer, they should think about the alternative investment strategies a PE can provide. Marc: You understand the PE mentality through and through. For a moment, put yourself in the shoes of the tech company professional being courted with a PE investor for the first time.
What advice do you have? 1. Sellers should be certain to generate the right peer groupings and benchmarks for the company/asset they are selling. Potential investors would want to know whom you will be compared to on the market predicated on the complexity and maturity of your company and, of course, on your products. 2. It’s extremely important, showing how the R&D company can be a competitive differentiator. Do you have top-quality code?