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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host
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To: Skeeter Bug who wrote (12753)3/4/2001 3:24:09 PM
From: geode00  Read Replies (1) of 42834
 
I figure that the extremes on either side (NAS at 10,000 or at 500) are just that, the extreme ends of the expectation bellcurve. Can happen but probability is extremely low.

problem is, debt is the *MAJOR* reason the economy is humming. why do you think everyone wants lower rates? so they can take on more debt!

People don't take on debt for the sake of debt. They take on debt for the sake of stuff. When that stuff generates more productivity in the future, debt is worthwhile. If you borrow money so that you can stick it in the fire and burn it, that's not worthwhile.

In fact, you can argue that if Americans wanted even MORE stuff like computers for example, the NAS wouldn't be having as much of a problem. Did Americans simply run out of money to buy these things? Doesn't look like it, they're simply opting for non-tech items like houses and clothes which probably don't cost as much as fiber optic cable and new servers.

The higher the level of debt, the greater the efficacy of a rate cut. Those extra $100 or so that you don't have to spend on debt every month, probably gets pumped into more stuff. Sounds like a house of cards (and sometimes it is) but eventually most mortgages and loans get paid off from future earnings.

You just have to keep those earnings pumping. I'd opt for having more debt than having unemployed people sitting on their hands doing zero producing but still consuming.

All-in-all, an expanding economy floats all boats including those of lenders while a declining economy eventually sinks everyone.
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