Tax cuts vs. Government spending

An economy is a a system where people buy and sell things. And as these transactions take place, money changes hands and brings value to the different players in the system. When an economy tanks, money is in short supply: indeed that is why the economy starts to falter. Money/value/wealth is the life- blood of an economy. Therefore in order to bring back life to an economy you need to "inject" money. Note that is very different from the Republican stand point of "cutting spending". Spending is the economy! Cutting spending is equivalent to drawing blood out of a patient who NEEDS blood. So in order to bring life back, someone has to spend. If it is not the people, it must be the government. That's where the infrastructure projects come in. It's right out of Keynesian economics: give some men shovels and ask them to dig a hole; when they are done digging ask them to fill it up again and at the end of the day pay them some money for their work.

That is one way to "inject" money into the system. The other way is to give people tax breaks. No doubt about that. But again you want to give the break to people who will actually spend it. Give a millionaire a tax break and he/she will probably either invest it in a bank in China or buy some stock of a relatively successful business or even park the money in a Swiss account. The money will disappear from the primary market and get sucked into the secondary markets. And money in the secondary market will do no good whatsoever to help the economy. The economy is in the primary market. So to ensure that the money stays in the primary market the tax relief has to go to people who will actually spend it. Again, key word: spend.

Lastly tax relief only affects people who still have a job and are paying income taxes. For the people who have lost their jobs, such relief means precious little. No income, no income tax. No income tax, no tax relief. Tax relief will provide relief to those already employed but will not revive the system if a large number of people remain unemployed. The strategy therefore should rest both on re-employment and relief. Not either or.

YellowStone and the fate of humanity

Mt. Redoubt, in Alaska, is going to blow. There is no reason to redoubt or even doubt that. On the other side of the Pacific, a volcano in Japan spewed hot gases and ash into the atmosphere. Yellowstone Park was in recent news. There were more than 250 tremors in the mid to high 3 range on the Richter scale. The scientists monitoring the park said it was unusual but they also said that they didn't think the situation was getting out of hand. What's going on with all the volcanic activity?

For those who don't know, Yellowstone Park, the beautiful snow covered wilderness with the timely geysers, is actually a caldera. It sits atop a huge magma chamber which erupts time to time, violently, spewing thousands of cubic miles of rock into the air. The fiery plume from the eruption rises miles into the atmosphere and the ash hangs in the air and travels far and wide. It darkens the sky and hides the sun. Not a very happy prospect. The Yellowstone caldera has erupted violently three times in the last 2.1 million years. Many scientists say that is not a pattern and that a lot of the magma has already been ejected so even if there was another eruption it would not be a violent one or at least not as violent as the previous ones.

According to the Toba event theory, a similar eruption occurred approximately 75,000 years ago in south east Asia. It created the Toba Lake of current times. When it erupted it covered the world in ash, darkened the skies and nearly wiped off the human species. Exactly how violent are these eruptions? To use terms we understand better, let's compare this with other explosions or eruptions that have happened in more recent times. Much of this is available on Wikipedia but I'll compile them here nevertheless. The Toba eruption was two thousand times more powerful than Mount St. Helens and twenty thousand times more powerful than the Tsar Bomba. Now the Tsar Bomba, a 50 megaton thermonuclear device, was approximately ten times as powerful as all the explosives used during World War II combined, including Fat Man and Little Boy. Think about that for a minute. The Toba super volcano erupted with twenty thousand times as much ferocity as the Tsar Bomba which in turn exploded with ten times the violence of all explosives used in WWII. That's a lot of violence coming from mother nature.

The Toba eruption was cataclysmic. Volcanic ash is actually tiny shards of glass which, if inhaled, can kill animals quite quickly. It killed off almost all plant and animal life in South East Asia. It also brought about a volcanic winter where temperatures dropped 3 degrees Celsius (equal to a drop of approximately 5 degrees Fahrenheit). It is conjectured that human species was nearly wiped off with a mere ten thousand or so survivors and about a thousand breeding pairs. This theory is used to explain why the species is so homogeneous around the world: Because we are all descended from a handful of survivors of a great cataclysm. And it makes one wonder, that if we all are so closely related, then what causes the division and strife that we see today. The Jews and Arabs, the Christians and Muslims and Hindus, the Allies and the Axis, the whites and blacks and browns: all descended from a lucky few.

The Yellowstone caldera has the capacity to blow with the ferocity of ancient Toba. Some say it erupts approximately every 6o0,000 years. And if that is the case we are 40,000 years over due. Others say that period is longer, since it has erupted thrice in the last 2.1 million years. And still some others say, those eruptions are not good predictors of future activity. I don't have a preference. I would rather it never erupt again at all. But if it does, how have we, as humans prepared for it?

Instead of realizing our basic commonness: that we are all descended from a few survivors of the last great cataclysm; that it shouldn't be us versus them, but we all together versus nature; that our species, and life on earth in general, is fragile, we have stoked our differences. Instead of coming together as one species to ensure our survival, we have created more reasons and ways to destroy ourselves.