Paul Craig Roberts
“Permit me to issue and control the money of a nation, and I care not who makes its laws.” —Mayer Anselm Rothschild, 1790
Thirty-eight years ago when I was in charge of United States domestic economic policy, the US Treasury and President Reagan believed that the purpose of economic policy was to serve the country, not Wall Street and the banks or the corporations or any of the various organized interest groups. Our idea was that policy could not be for this or that part of the economy. It had to be for everyone.
This changed in the last year of the Reagan administration after I was gone. The George H.W. Bush Republicans, who by then had taken over the Reagan administration, decided that economic policy had to serve the election of Bush as Reagan’s successor. They created the “Plunge Protection Team,” consisting of the Treasury and the Federal Reserve. Its purpose was to stand ready to intervene in financial markets and to support financial prices in the event of a stock market downturn for which the Bush Republicans had set themselves up to be blamed.
Reagan was elected because the post-war Keynesian demand management policy of pumping up consumer demand with money supply growth and easy credit, while maintaining high tax rates on work and investment, had broken down. The result was the rising inflation and unemployment trade-offs known as stagflation.
The small handfull of Supply-side economists that existed understood that the high tax rates were restraining labor and investment inputs into the economy, because the after-tax rewards were low. A 50% tax rate on wages and salaries meant that when a person’s income reached the threshold of the 50% rate, he was working for half pay. For the investor, the situation was worse. At the 70% bracket, he was taking investment risks for 30% of his earnings.............https://www.paulcraigroberts.org/2019/10/21/the-american-economy-rip/
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