The endless yap since Reagan is that more capital is needed by the rich to stimulate investments. The opposite has been destroying the banking industry.

Endless capital is already available, but there is nothing to invest in. Going out and looking for something to invest in created the housing bubble with its related gambling fiasco which created the recent recession. Something similar is happening again, because investors can’t find anything to plow their endless capital into. The world is awash with excess capital and nothing to spend it on.

This problem started with the transfer of manufacturing to other countries. The reduction in domestic manufacturing left banks with little to invest in. Banks have to be investing to make money. So they turned to home owners and loaned them money on bad loans which could not be paid.

After getting bailed out for that bit of criminality, the banks still have the same problem. There is no one to borrow their money, even at extremely low interest rates. How do banks stay in business without someone borrowing their money? They don’t. It is the number one factor bankrupting the banks.

How then can a tax give-away stimulate the economy by increasing capital for investments? It’s like force-feeding obese persons to improve their health.

The extreme amount of excess capital is causing the stock market to go off the graphs. The rich have no place to put their excessive wealth than the stock market.

To claim the rich need more money from a tax give-away is clueless rationalizing. The purpose of promoting a tax give-away is to strip government of revenue as an excuse for destroying the social programs.
 

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