Reaganomics 101
The 1980′s saw three presidents, though Jimmy Carter was only around for his final year in the Oval Office and George H.W. Bush barely got into the White House before the 90′s clock came calling. The 80′s were dominated by the policies of one president in particular, the two-termed 40th President of the United States Ronald Reagan, who held nation’s highest position from 1981-1989. The growth and economic expansion we experienced throughout the 80′s, especially by comparison the “shrinkage” we’ve seen in recent years, is just another reason why the 80′s were the most awesome 10 years in world history, leaving the 1990′s with impossibly big shoes to fill (though speaking of shrinkage, between Seinfeld, presidential sex scandals and pogs, the 90′s did post a valiant effort). While the prosperity America came to enjoy may have not been completely a result of Reagan’s efforts, probably influenced by the cyclical nature of global markets as well, why look a gift horse in the mouth? Here are the pillars of “Reaganomics,” as the president’s economic platform came to be known, that at least did not get in the way of, if not set the stage for financial upturn:
- Reduce government spending This one makes enough sense. After all, less spending leads to less borrowing from foreign sources and ultimately lower national debt.
- Reduce income and capital gains marginal taxes Lowering taxes on income and capital gains, means the government gets less money, but it also means the working American keeps more money, particularly those in higher tax brackets. This results in more discretionary income, ultimately stimulating more financial transactions and boosting GDP.
- Reduce government regulation of the economy Less regulation gives banks and loan officers more freedom to take chances and get creative with their efforts, making it increasingly possible for upstart businesses and those in need of funding to secure capital. This is where some critics say the financial meltdown mess began as over time people abused and manipulated the lack of regulations to an out of control level. But here, we celebrate the 1980s not condemn it, plus half those modern day critics were probably more concerned with middle school popularity than dealing with stagflation back in 1981.
- Control the money supply With money is less supply and equal demand, the value of the dollar is sure to rise, serving as safeguard against inflation.