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Northwest Voices

Seattle Times letters to the editor

November 12, 2008 at 3:32 PM

How stimulating

Don’t be fooled

When is a stimulus check not a stimulus? When you have to pay taxes on the money you just paid taxes on [“Bernanke gives nod to more government stimulus,” Politics, Oct. 20].

Any stimulus check you get from the government comes with a caveat that requires you to record it as income when preparing your taxes that year. Ergo, you are paying taxes on the tax dollars you paid the government. This is double taxation.

Do you think most people who get a check in the mail know or prepare to pay taxes on this money? Wait until they get the IRS [Internal Revenue Service] notice a year or two later that they didn’t pay taxes on their stimulus check; now they owe the taxes plus the penalties for late payment.

The stimulus program is nothing but a Ponzi scheme with taxpayer dollars — generating more tax dollars from current tax payments. Pretty soon, there will be no income left to keep, except that which the wealthy politicians think you need to keep.

How many millionaires do you think there are in Congress? More than 35 percent, which is less than 1 percent of the population. Know why? They are living off your hard-earned dollars.

— Art Francis, Issaquah

It’s stagflation

Here is an example of how ineptly our government handles the economy: Federal debt exceeds $9.5 trillion and the economy has fallen into stagflation, a combination of economic stagnation and inflation.

The Federal Reserve, ignoring history, wrongly believes interest-rate cuts stimulate the economy. (This tactic never has worked, not for Former Federal Reserve Chairman Alan Greenspan and not for Federal Reserve Chairman Ben Bernanke.) So, the Fed repeatedly cuts the discount rate, impacting all interest paid, including the interest the government pays to all those who own T-bills, T-notes and T-Bonds.

The discount rate was above 5 percent in 2006 and 2007. Today it is 1 percent. While Congress creates stimulus packages to send billions into the economy, the Fed’s rate cuts cause billions fewer federal interest dollars to reach our economy.

The Fed continues its futile rate cuts, apparently believing if something doesn’t work and never has worked, they should keep doing it. With leadership like that, is it surprising we’re in trouble?

In a stagflation, the economy is starved for money while prices rise. The cure: the government must pump massive amounts of money into the cash-starved economy, and raise interest rates.

— Rodger Mitchell, Wilmette, Ill.

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