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Strategies & Market Trends : John Pitera's Market Laboratory
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To: Yorikke who wrote (3171)1/14/2001 8:02:17 PM
From: John Pitera  Read Replies (1) of 33421
 
I don't know what AG is thinking but my bet is he
very aware of this school of thought, and seriously considers the implications of declining debt on investment
resources.

Also, if we accept the contention that debt must continue to expand, then the tax cut concepts could help by
limiting the expansion of Government Debt Retirement. Another possibility might be the ideas voiced by Levy.

Yes you would think that Greenspan would be receptive to a Tax Rate cut so that the contraction in the
US Govt Debt is not too rapid or severe. The idea being that by draining credit out of the system It's
contracting the credit base which is deflationary.

One such plan is for the Federal Reserve (or its surrogate) to take out $35 billion to $65 billion in zero interest mortgage loans on state and local government infrastructure improvements. The exact amount of
loans taken in any year would depend on the relative strength of the economy. These mortgages would be amortized over a period commensurate with the life of the improvement. Because either a state or
local government would be the party incurring the debt, most loans would have to be approved by the voters of the locality.

That would be an interesting road for the FED to go down, It would seem have political implications in terms
of which states and local Govt's were able to get relatively greater percentages of this type of funding which
could be problematic.

The effort would at least need some nice StatesMan type leadership.

John
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