Fed cuts rates 3/4’s of a point

Here is some breaking news about the Fed cutting rates by 3/4’s of point, and urging Congress and President to cut taxes quickly to avoid a recession. It is short, so I have the entire article for you.

Fed Cuts Interest Rate as Treasury Secretary Urges Quick Action on Economic Stimulus Plan.

WASHINGTON — Treasury Secretary Henry Paulson said Tuesday that Congress and the administration need to agree quickly on a package of tax cuts as the Federal Reserve cut a key interest rate by three-fourths of a percentage point to reinvigorate the economy.

“Time is of the essence and the president stands ready to work on a bipartisan basis to enact economic growth legislation as soon as possible,” Paulson said in remarks to the U.S. Chamber of Commerce. He spoke as House Speaker Nancy Pelosi and leaders in both parties prepared to meet with President Bush at the White House to discuss a stimulus bill.

Such legislation presumably would involve tax rebates, business tax cuts and funding for a Democratic-led call for additional food stamp and employment aid.

The Fed’s decision to slash the federal funds rate — the interest that banks charge each other on overnight loans — apparently was the biggest one-day move by the central bank in recent memory. The Fed cut the rate to 3.5 percent from 4.25 percent.

Its action was the most dramatic signal that it can send of its concern about a recession.

Hat tip: Fox News.

You may not want my two-cents, but here it is anyway. I wish they would leave the daggone market alone. Really. The housing always gets into a bubble, and most of us were waiting were for the prices to come down before we bought our house. Thank you very much, now I cannot buy a house because you are falsely keeping the inflated prices high. This is NOT what a free-marketer does.

I understand the panic due to the other countries tanking in their stock markets, but may I remind you that China has an unsustainablely high (falsely high) rate of exchange on its money. What is it, the yen? They refuse to accurately disclose the actual trade-in value. I don’t give a damn if they tank! Doesn’t anyone remember that this is what they were trying to do to us?

Nor do I care that Mexico is having a problem with all the illegal aliens here are going home to Mexico. I have no sympathy for that government. They actually sent a delegation to Arizona’s STATE government to ask them not to follow Arizona’s laws! That takes testicles! Yes, they are feeling the pressure of having to deal with the high unemployment, health care, and whatever crap they robbed from us that they are no longer able to steal. But I am getting off track.

The facts are, the Fed is one that raised the rates in the first place. If there is any blame to go around, look to Bernacke. (sp?) The rest of the blame belongs not on the sharks who were able to get you to sign over your mortgages to them so that you could enjoy low payments. This really irks me. YOU are the one who knew you couldn’t afford the house. YOU are the one that enjoyed your house while I had to wait patiently for the bubble to burst. So why I have to pay for YOU to keep YOUR house? I SHOULD NOT, and that’s a fact. Good day.

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How the tax system works today; Tomorrow, try my way

Below you will find a very fundamental explanation of how the tax system works. However, I will submit to you that it is not working. Not if you wish for equal protection and fairness under the laws of a free society. But I’ll save that for the end. Here we go:

This is a VERY simple way to understand the tax laws. Read on — it does make you think!!Let’s put tax cuts in terms everyone can understand. Suppose that every day, ten men go out for dinner. The bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:

The first four men — the poorest — would pay nothing; the fifth would pay $1, the sixth would pay $3, the seventh $7, the eighth $12, the ninth $18, and the tenth man — the richest — would pay $59.

That’s what they decided to do. The ten men ate dinner in the restaurant every day and seemed quite happy with the arrangement — until one day, the owner threw them a curve (in tax language a tax cut).

“Since you are all such good customers,” he said, “I’m going to reduce the cost of your daily meal by $20.” So now dinner for the ten only cost $80.00.

The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still eat for free. But what about the other six — the paying customers? How could they divvy up the $20 windfall so that everyone would get his “fair share?”

The six men realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, Then the fifth man and the sixth man would end up being PAID to eat their meal. So the restaurant owner suggested that it would be fair to reduce each man’s bill by roughly the same amount, and he proceeded to work out the amounts each should pay.

And so the fifth man paid nothing, the sixth pitched in $2, the seventh paid $5, the eighth paid $9, the ninth paid $12, leaving the tenth man with a bill of $52 instead of his earlier $59. Each of the six was better off than before. And the first four continued to eat for free.

But once outside the restaurant, the men began to compare their savings. “I only got a dollar out of the $20,” declared the sixth man who pointed to the tenth. “But he got $7!”

“Yeah, that’s right,” exclaimed the fifth man, “I only saved a dollar, too . . . It’s unfair that he got seven times more than me!”.

“That’s true!” shouted the seventh man, “why should he get $7 back when I got only $2? The wealthy get all the breaks!”

“Wait a minute,” yelled the first four men in unison, “We didn’t get anything at all. The system exploits the poor!”

The nine men surrounded the tenth and beat him up. The next night he didn’t show up for dinner, so the nine sat down and ate without him. But when it came time to pay the bill, they discovered, a little late what was very important. They were FIFTY-TWO DOLLARS short of paying the bill! Imagine that!

And that, boys and girls, journalists and college instructors, is how the tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up at the table anymore.

Where would that leave the rest? Unfortunately, most taxing authorities anywhere cannot seem to grasp this rather straightforward logic!

END

Do you understand now? Do you see any logic in this? If not, may I suggest to you a FAIR tax? It consists of complete removal of the IRS forever (savings in that alone!) to be replaced with a federal sales tax that applies to everyone. This way the people who spends more pay more in taxes. This would be fine, since they are now given the choice on what to buy according to price.

Do not cringe, please! I know that the price and availability are so important to those of us who sit at a desk and crunch numbers, but trust me on this. This is a good theory. Here is why. There would be no taxation on anything not to be considered a final product. A final product would be designated as “A product available for retail.”

This way we are not taxed for the flour, sugar, eggs, transportation, etc. which go into the bread we buy. If flour is not taxed, that cost is not passed on to the consumer. Also, the bakery pays less for his product, so our cost is less. This only one of millions of examples.

This is being explained by someone who only took two courses in Economics, but it is also common sense. For each product we buy, every single solitary ingredient is taxed on its way to every place it stops on its way to market. Is that fair? NO! It should be a final product tax, and everyone should pay the same amount.

If you don’t want to be on the bottom rung of society, stop sitting there! Get an education, then get a better job. Better yet! Create your own job. This is America. Land of the *taxed to death* free!

By the way, are you aware that the Boston Tea Party was caused by an outcry over a 2% tax?

Hat tip: The Chicken Coop linked to Syringe.Net.Nz.