From The Market Ticker
Can we call the curtain down on the BS parade yet?
This is a “cloud company” and they’re getting hammered.
The so-called “growth” that everyone has expected is simply not materializing.
Reality is that fiscal deficits, as I’ve repeatedly outlined, are exactly identical to a tax on both GDP and all saved capital and act in an exactly-identical fashion in the economy at large.
This is the paradox — “increasing taxes”, to the extent spending doesn’t change, is actually economically beneficial as the deficit is reduced!
But wait — if deficits are identical to taxes in what they exert on the economy, how could taxes be better than deficits?
That’s easy — taxes (other than property taxes, which are ridiculously destructive yet are ordinarily only imposed by state and local governments) are typically imposed on profits. They therefore leave alone previously-saved capital, where deficits act on gross receipts (not profits) and saved capital alike.
Therefore deficit spending is in fact worse than the same dollar amount extracted in taxes, as deficit spending not only takes from net earnings it also impacts saved capital and thus damages capital formation.
You’re not going to see an economic recovery until the government stops destroying the base from which business formation and innovation occurs.
There will be no economic recovery until deficit spending ends.