Tuesday, October 30, 2007

Inflating the Beast

One of the things I have been thinking about is the reason for the inflating of the money supply. Conservatives have been arguing that cutting taxes increases tax revenues using the Laffer Curve argument. How could this sleight-of-hand be accomplished? Inflate the money supply. With the combination of nominally more money in the economy and the effect of the AMT tax hitting the middle class, there would be an increase (nominally) in the amount of tax revenues. Combine this with social security payments kept virtually the same (and doing the most harm to low income retirees) and you end up effectively starving the beast.

It's dishonest, of course. But I expect conservatives to tout this come next year.