Appeared in December 30, 2010 Morgan County Citizen
In response to “Equitable shared sacrifice” (11/18/10): Regarding the comments on double taxation “if double taxation were an actual practice…” What? It IS an actual practice. You can’t just state it is not and somehow that magically makes it so. It’s just math. Profit is taxed and that tax is paid by the corporation. The corporation pays dividends from the remaining taxed profits to its owners (shareholders). The shareholders (you, me, and retirees) pay tax on the dividends: it is thus taxed twice. I don’t understand the confusion here.
Celia Murray is incorrect in her Dec 9 editorial when she states “This recession is a private-sector phenomenon…a … bubble … that has recurred … in the free-market system for hundreds of years”
We do not have a free-market in this country. We have a hybrid market that combines a free-market (private ownership) with socialism (heavy regulation, government control of money, and a high tax burden). It is government control of the money supply via a central bank (the Federal Reserve) along with fractional reserve banking that is the direct cause of all recessions (not “animal spirits” as proposed by Keynes). When someone can create money out of thin air (fractional reserve lending or direct “printing”) or destroy it just as quickly what other result is expected? If the market is flooded with corn for several years and then suddenly the supply drops off, would you not expect disruptions in the economy? So why should we expect massive infusions of a commodity that touches every part of the economy (money) to not wreak greater damage?
Prior to fractional reserve lending being legalized in the late 18th century (in England) there were NO recessions and there were NO economy wide bubbles. The recessions that occured after this lasted no more than 18 months. The “Great Depression” was great because prior to it our government DID NOTHING when recessions occurred. The depression was the first time it actually tried to do something – and we all know how well that turned out. Space constraints compel me to suggest that those interested in a deeper understanding of recessions please see “The Mystery of Banking” (http://mises.org/books/mysteryofbanking.pdf).