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Strategies & Market Trends : New US Economy Policy
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To: Arthur Tang who wrote (282)5/25/2001 7:40:02 AM
From: Arthur Tang  Read Replies (1) of 435
 
Are the sins of overcapacity, and conservation efforts the anticlimax of a growing economy? Or why should we even think of using them to temper over enthused economy?

A run away overheated economy can be harmful in the way that steadily growing economy can be planned. Sudden overheating and sudden interest rate changes to rein them in, made servomechanism control(of single variable) difficult. So, overcapacity of 5% constantly, and conservation of 5% reduction of usage are planned in the course of economical development. The speed up of overcapacity and the slow down in conservation depend on price adjustments. This is a three dimensional curve where wealth vs. supply and demand is plotted(it has nothing to do with cost of goods and it is not inflation).

Currently, in the conservation of crude oil, and the usage of renewable alcohol in gasoline formula, we have to have a price adjustment to determine the amount of gasoline, people will use during the year. The experiment will eventually enable us to determine the allowable usage determined by the acreage of agricultural land assigned for alcohol production and the conservation of reserve of crude oil under ground vs. the afford-ability of wealth.

Such experiments some time seem harmful, but in the long run, the experience will make us better planners. The need for FEDS' monetary policy to adjust the size of the economy would be inadvisable. FEDS only need to print sufficient money(bills) to support the growing economy(so real money can change hands, we don't want to go through bartering when cash is not available).
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