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Strategies & Market Trends : MDA - Market Direction Analysis

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Jan 8 4:00 PM EST

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To: Zeev Hed who wrote (76757)	5/10/2001 2:57:55 PM
From: ahhaha	Read Replies (1) of 99985

For the same reasons that you gave the Fed's the control on the monetary policy. It wasn't me. What is wrong in taking $160 B a year of excess taxation and giving it back in the form of let say $1000 to each tax payer. Nothing. This way you eliminate the soaking action of the budget surplus, True. let consumers rebuild their own balance sheet, and to the extent that some of this comes back into the economy in the form of end demand, alleviate some of the over capacity that exist. Consumers wouldn't use such a tax cut to repair balance sheets. They'd spend it. You are making a mistake by using the word "capacity" in some mental mechanism hooked with various other abused economic concepts. You believe there is plant and equipment that is sitting idle when someone reports that capacity is x% below what it should be. You haven't researched or studied what is meant by capacity. In the sense you mean it the US is operating currently at 100% of capacity. It is not like business is not going to invest to improve efficiency nor is there a problem of shortage of capital for them to do that. John Chambers and the whole telcom sector wouldn't agree. That's quite an important segment of the economy and may be representative of much more of it than is currently believed. Telcom doesn't have overcapacity. It has the wrong capacity and needs to upgrade. A cut of $1000 to consumers won't help consumers the way a cut of the corporate income tax would. To say that we don't have a problem of shortage of capital flies in the face of what AG recently said. What was quite right in the early 80' may not be right in the early 00'. What was right for the '80s was only marginally tried before the old regime was re-applied. The '86 Democrat dominated Congress did this because they believed the hype about greedy capitalists getting too much and they had a sacred duty to wage the war on wealth. It is like fighting the last war. The last war is being put back in place by actions of the FED to save the economy and by the resistance of Congress to cut taxes where it needs to be done. Congress does nothing for capital formation. Congress is lowering the top bracket from 39% to 35%. In the '80s it was 33%. This shows the last war was never addressed and it is no where near being addressed. The war which you seem to think has disappeared is about break out again, and you'll see it inflation. What will you suggest then? Raise taxes due to too much final demand?

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