Call me crazy, but I think I finally understand Joe Biden. Not entirely, but at least his economic beliefs. I heard him say not too long ago, that we had to keep spending money to keep from going bankrupt. I thought to myself, "Huh?" It didn't make any sense to me at all. You can't keep spending money if you are out of money, can you? Well, no. You can't, and I can't, but that's because, unlike the federal government, we can't just print more money when we run out. They can. Whether or not they should is another question entirely.
I understand the theory though. It's basically a dumbed-down version of Keynesian economics. The theory goes that, in tough economic times people are not spending the money that they have. This lack of monetary circulation creates a drag on the economy. With little money being invested by private interests, there is little growth, which leads to stagnation and a deepening of the recession, depression, whatever you want to call it. Biden and his ilk believe that it is the government's responsibility to stimulate the economy by infusing it with cash. With more money circulating, more people will be led to invest and spend their own money. This will jumpstart the economy. When the crisis is over, the government can then suck the excess money back out of circulation by raising interest rates, leaving behind a much stronger and growing economic situation.
It makes sense on paper. But just like most things on paper, including the money we are printing, it doesn't pass the smell test. The problem is that, and I may be wrong on this, the government doesn't create or produce anything by itself, that means that the money has to come from somewhere. If they continue to monetize their own debt - quantitative easing as they call it, lending themselves money to pay themselves back as I call it - the value of the dollar will necessarily decline. Basically, your money will buy you less stuff. This is called inflation. Inflation is not always a bad thing, but when the dollar is overcirculated to the point that it is literally not worth the paper it's printed on, that may be bad. So the money to pay for all this will have to come from taxes. Since only the wealthiest people in America actually pay taxes now, and no politician is going to propose making the rest of the country pay more, we will go after the rich. They can afford it, so let's soak them.
That's where Biden and his buddies have it wrong. The whole point of stimulating the economy is to convince people to invest their own money so the government can get theirs back. No one invests money to lose money, you invest to make more money than you started with. The more, the better. But if, in order to pay for all this, the government has to take more of the money we earn, what incentive is there to try to earn more money? Don't kid yourself, the wealthy are not stupid. They got rich for a reason. They aren't going to risk taking a loss if they aren't sure how much of their gain they'll actually be able to keep. And so they will continue to sit on their money.
FDR tried to go after the rich during the great depression, because they were greedily hanging on to the money that they earned, instead of trying to increase their wealth so he could take it from them. This class warfare, in addition to the onerous tariff laws passed in the late 20's, actually put the "Great" in the great depression. Let's not make the same mistake again. If we go after the wealth-creators, they will stop creating wealth, and then we all lose.