Can You Hold Your Financial Breath for Two Days?

November 2, 2010 by  
Filed under Economics

Today and tomorrow are set up to be quite tumultuous for the world of personal finance. The new look of the House and Senate may determine whether federal income taxes (for those of us who pay taxes) will go up on January 1.  Of course none of our chicken-sh— politicians wanted to vote on tax rates before the election, but no surprise there.

Tomorrow the Fed Open Market Committee meetings end. Some announcement is expected about new strategies for stimulating the economy, likely through a plan of “quantitative easing.”  This is the politically correct phrase now being used to describe what the Fed may do to apply inflationary pressure by increasing the money supply.  I prefer the term “monetizing the debt”  which I have written about earlier.

I think the Fed will make this happen because that’s what Bernanke has suggested. But there will be dissent among the committee members. The only real question is whether the Fed will announce how much money it plans to inject into the system tomorrow, or whether it will do it piecemeal.

This is why I bought more TIPs last week, even with a negative yield.

What are your plans for responding to what could be two days of financial uncertainty?


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16 Responses to “Can You Hold Your Financial Breath for Two Days?”
  1. Evan says:

    I was thinking the head in the sand technique would be best LOL

  2. MasterPo says:

    I’m sitting tight for the time being overall. Accumulate cash at the most.

    As for the tax cuts, don’t bet on extending them anytime soon. The lame duck congress won’t. And even if the Republicans do pass legislation in January, Obama campaigned on his promise to let them expire so it’s 50/50 at best if he’ll sign it.

    Raising taxes during a recession – Well, it has the novelty of never having been tried! 😉

  3. MasterPo says:

    ps- You know how I feel about TIPS vs. Gold.

  4. Jack Clark says:

    “Raising taxes during a recession – Well, it has the novelty of never having been tried!”

    As usual Po you have your history wrong. (Seems to be a theme with you.)

    Do you remember the double dip recession of ’81 & ’82.

    What did Reagan do in ’82 when the country had negative GDP growth (you can reserach the source via the BEA) and double digit unemployment?

    He went along with not one but two tax increases.

    1. Tax Equity and Fiscal Responsibility Act of 1982

    In 2003, former Reagan adviser Bruce Bartlett wrote in the National Review that:

    “TEFRA raised taxes by $37.5 billion per year”, elaborating, “according to a recent Treasury Department study, TEFRA alone raised taxes by almost 1 percent of the gross domestic product, making it the largest peacetime tax increase in American history.”

    2. Highway Revenue Act of 1982

    This little guy increased the gas excise tax from 4 cents to 9 cents. So a tax increase of over 100%.

    As usual Po get your facts straight before you post.

  5. Another Reader says:

    OK, I have turned blue in the face from holding my breath, but I haven’t seen a single positive thing happen. Instead I have seen more hostility, devisiveness and downright meanness on the part of those we elected or removed. Can’t we throw them ALL out and start over?

  6. MasterPo says:

    Jack – Your revisionist history won’t wash with me. President Reagan is well known for CUTTING taxes. All you libs just LOVE to SLAM him for it!

    But keep saying that. Maybe someone will believe you.

    Going to be a fun 2011…

    • Jack Clark says:

      How is it revisionist history when Reagan’s own economic advisor called that tax the largest peacetime tax increase ever in the NATIONAL REVIEW?

      A conservative advisor who worked for a conservative president in the original bible of the conservative movement calls it that and you call it:

      “Jack – Your revisionist history won’t wash with me. President Reagan is well known for CUTTING taxes. All you libs just LOVE to SLAM him for it!

      But keep saying that. Maybe someone will believe you.”

      You response is so educated and informative Po. You really show your mental faculties and you’re ability to come up with an educated response.

      First of all you pinhead I am a registered Republican. Second, unlike you brainless conservative pinheads who only know what Fox tells them to stay I am willing to call a spade a spade and inform myself about my own party and vote against them and speak out against them if warranted.

      Think what you want but the Reagan tax increase of ’82, which happened in the middle of the double-dip recession of ’81-’82 is still the largest peacetime tax increase in history, period.

      So whenever you’re ready to admit, that as usual whenever you spout facts and figures and history, that your statement is completely erroneous I’ll be waiting. If not then just stay off this site and go home to your “blog” where you can spout your half-truths and misstatements just like you do whenever you post here.

      Just for the record here is a snippet of the article from the National Review:

      “It’s doubtful, for example, that a contemporary Reagan figure would seek to solve every problem by cutting taxes. In 1981, the former California governor swept into office promising to slash taxes to their lowest-ever levels–and with the Economic Recovery Tax Act, that’s exactly what he did. When Reagan arrived in the White House, the top marginal tax rate was 70 percent; by 1987 it was 38.5 percent (roughly the same as the rate under Bill Clinton). But while today’s conservatives continue to call for lower taxes in the name of the Gipper–Grover Norquist’s Americans for Tax Reform, for example, pressures Republicans to sign a “no new tax” pledge every election cycle–there’s simply no evidence in Reagan’s record to suggest that he would’ve followed his signature achievement by pushing for ever lower rates.

      In fact, much the opposite. In 1982, Reagan agreed to restore a third of the previous year’s massive cut. It was the largest tax increase in U.S. history. In 1983, he raised the gasoline tax by five cents a gallon and instituted a payroll-tax hike that helped fund Medicare and Social Security. In 1984, he eliminated loopholes worth $50 billion over three years. And in 1986, he supported the progressive Tax Reform Act, which hit businesses with a record-breaking $420 billion in new fees. When it came to taxation, there were two Reagans: the pre-1982 version, who did more than any other president to lighten America’s tax burden, and his post-1982 doppelgänger, who was willing to compensate for gaps in the government’s revenue stream by raising rates.”

  7. MasterPo says:

    So riddle me this:

    If higher taxes is sooooooo awesome for an economy, why does Obama brag about having given a tax cut to the middle class? (phantom though it may be)

    If higher taxes are the answer why hasn’t he enacted or used Executive Orders for new higher taxes already?

    If we need more taxes why just let the Bush taxes expire? Why not add more to it?

    BTW, since you seem to be convinced Reagan was such a tax hiker, do tell: What happened to the Luxury Tax? Why was it repealed 2-3 years later?

    • Jack Clark says:

      “BTW, since you seem to be convinced Reagan was such a tax hiker, do tell: What happened to the Luxury Tax? Why was it repealed 2-3 years later?”

      Because you putz, Reagan was a tax hiker after ’82. His own economic advisor Bruce Bartlett has said it in numerous conservative formats over the last fifteen years.

      It’s undisputable history.

      Some of the taxes that Reagan went with were only temporary while we still live with most today after he realized that the amount of the tax cut in ’81 was a mistake and that the government had a serious revenue problem.

      James Baker is the one that convinces Reagan to raise taxes again and again as he realizes that the benefits of the tax cuts may or may not be seen during Reagan presidency but the deficit totals would start to spiral right away.

      Reagan’s tax increases:

      Tax Increases Billions of Dollars

      Tax Equity and Fiscal Responsibility Act of 1982 +57.3
      Highway Revenue Act of 1982 +4.9
      Social Security Amendments of 1983 +24.6
      Railroad Retirement Revenue Act of 1983 +1.2
      Deficit Reduction Act of 1984 +25.4
      Consolidated Omnibus Budget Reconciliation Act of 1985 +2.9
      Omnibus Budget Reconciliation Act of 1985 +2.4
      Superfund Amendments and Reauthorization Act of 1986 +0.6
      Continuing Resolution for 1987 +2.8
      Omnibus Budget Reconciliation Act of 1987 +8.6
      Continuing Resolution for 1988 +2.0

      Total cumulative tax increases +132.7

      So other than a token tax cut in ’86, Reagan cuts taxes once in ’81 and then raises them every year of his presidency.

      Those are the facts Po.

      “If higher taxes are the answer why hasn’t he enacted or used Executive Orders for new higher taxes already”

      Because it’s all about the political gamesmanship of the day.

      In the 80s Reagan and Tip O’Neill actually were friends and had a good working relationship that actually got a lot of positive things done.

      That kind of cooperation from both sides is done in the current political climate where all that matters in getting re-elected and scoring brownie points with your party’s base.

      I’m sure there are numerous politicians out there that would love to compromise to get things done but unfortunately the political extremes in each party are the ones running the show and neither side will allow that to happen.

      Riddle me this Po:

      Why do you think you can lie and make false statements all the time and then run from the facts?

      Must be a great way to live life, loser.

      • MasterPo says:

        Note who is calling whom a “utz” and a “loser”.

        Typical liberal.

        I lived through the 80’s. Did extremely well. From my POV my taxes went DOWN, or, at a minimum, remained level.

        I have no doubt some pieces of legislation included a this-or-that tax. The President can’t veto everything just because it contains a tax.

        But on the whole President Reagan is famous (or infamous to liberals) for CUTTING taxes and REDUCING government regulations.

        • Jack Clark says:

          Note who has an aversion to reading and fact checking history.

          Typical conservative.

          “I have no doubt some pieces of legislation included a this-or-that tax. The President can’t veto everything just because it contains a tax.”

          This or that tax? Veto everything?

          Reagan’s own economic advisor Bruce Bartlett and James Baker have gone on the record as saying that post ’82 Reagan did nothing but tax mostly at Baker’s urging in the Wall Street Journal and the National Review and your best answer is “this or that tax”.

          Wow you are dense and living in a dream world.

          “But on the whole President Reagan is famous (or infamous to liberals) for CUTTING taxes and REDUCING government regulations.”

          And while he did a lot of that a lot of what he is now “remembered for” is more myth than fact.

          Same as Clinton.

          Seriously Po, read the links that were posted about what happened and admit you’re wrong or go back to your blog of intolerance and stupidity.

  8. Rick Beagle says:

    MasterPo.

    Here is a site you should visit:
    http://politifact.com/truth-o-meter/

    This site combined with some googling skills should keep you from looking so stunningly ill informed.

    Peace.
    Rick Beagle

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