Most students of economics are familiar with the Laffer curve, named by Dr. Art Laffer, which demonstrates how higher taxes do not necessarily mean a higher tax yield, with there being a point (the peak of his curve) after which total revenue falls when the tax rate increases.

CNN: SHARE THIS

The Spanish 10-year bond yield was at 5.32% Wednesday, well below its November peak in the 6.7% range and the 7% threshold which has been unsustainable for other countries in peripheral Europe.

FORBES: Citi Rings Warning Bell On Spanish Debt

Moreover, the average net yield on taxable money market funds has declined to less than 1% now from a peak of more than 6% in 2001.

FORBES: Breaking The Buck And Passing It, Too

The two-year bond yield -- one of the maturities the central bank could target -- has plunged from a peak of more than 7 per cent last year to 2.59 per cent yesterday.

CNN: Spain escapes aid but doubts remain