Laissez Faire, Greenspan got out of the way of Rubin and the dawn of a new technological revolution of the internet and the increased productivity that it, and 6 sigma business model taught to Jack Welch's GE disciples all over corporate America. But he couldn't keep out of the way, he thought that he should fix that which was never broken, and got IN THE WAY and broke the economy. He did not pop a bubble, he busted the plumbing. The new IPO companies, not just dot coms, but all sorts of industrial and service industry new companies all needed CAPITAL to start up, EXECUTE business models, and then make profits. Greenspan took that capital, the MONEY away...... Pulling the rug out from under then, Greenspan CUT THE LEGS OFF THE INFANTS and you all wonder why they do not run.
Why should interest rates at the Federal Reserve ever have gone to 6%, or even 5%, or even 4% when inflation was non-existent. We are talking Banks borrowing from the Central Banks. Look at you local bank, it was paying out and still is about 2%. You have to go real long term to get any interest rate above 4%.
It was all about MONEY SUPPLY. When Greenspan increased rates, he destroyed $10 Trillion Dollars and GROWING...probably close in my estimate to $15 Trillion Dollars now, of liquidity, that is MONEY. Paper or accounting entry, it is the currency that runs the world, makes business grow, from loans for expansion, etc.
Had Greenspan left the BOOM economy alone, it would have continued to GROW and make REAL MONEY, real products, real services, REAL PROFITS AND REAL EARNINGS. Half a start up company is not any company at all. When the money stopped, all the start ups stopped breathing. Now their suppliers are holding their breathe. We still need more money to resusitate this economy....and the markets.
We need OPEN CARRY, we need the Federal Reserve (FOMC Meeting meddlers all) to get out of our way, to drop rates back to logical, rational interest rates, where THE INTEREST CHARGED IS A RATIO OF SURPLUS EARNINGS. That is, money representing real assets, to avoid barter, as money always has done, should not leap ahead of NEW real assets that are produced (goods and services) minus the natural loss of assets from depreciation and obsolesence, or plain destroyed assets. Interest, seeks to create more money from the money it started with, principle plus interest. This is the natural ratio. IT IS A LOW INTEREST RATE. We are creating more wealth, that lasts longer, all the time. For example, We burn oil, surely, but look what is made and REMAINS from it. Every Good and service has an energy component. It endures, it just changed shape.
Interest rates, between banks and the central bank, can go to 2%, and should never be over 4% long term ever.
A bold statement. This is the most secure money, perhaps more so than Treasury paper, guaranteed by the ull faith and CREDIT of the United States of America...lowest risk. Lower the risk, the lower the interest rate.
LOW RISK EQUALS LOW INTEREST RATES.
The economy, if there ever was a ponsi scheme or a tulip bubble will right itself on its own. A chain letter even ends when everyone on the planet has read one. We do not need no Alan Greenspan meddling in this. That is and never wsa the job of the Federal Reserve. Alan Greenspan can and should get out of our way now. He can do so by lowering rates at least 50 more basis points, going past OPEN CARRY, and perhaps down to ZERO RATES (Fed rate minus inflation = 'zero" or even lower, that is free money...on loan...to banks....to increase the money supply). Then he can lower rates again by 50 basis points BEFORE Christmas. Then he can do nothing. He can do absolutely nothing, just leave rates there, 2 to 2.5%. Only going lower if we are in a depression, or war. Otherwise, just doing nothing. Nothing at all. That is too hard for Alan Greenspan the meddler to understand.
He just can't help himself. So we need fiscal policy to counter his meddling.
Fiscal policy like capital gains cuts, payroll tax cuts, and sure, increase the minimum wage, but lower independent contractor (1099-MISC) rules. Not $500, not $600, but let it be discretionary, any money high or low, let the employer and non-employee indpendent contractor decide. Increase the minimum wage, but let people decide for themselves when they are and are not employees how much they will do any given "job" for, and file 1099's accordingly.
Open up NAFTA more so, with GASTARBEITER, Guest worker visa for Mexico or where ever, to stop the capital flight, and capital goods, and wholesale factories moving to Communist China the new OIL MONGER MONGULS.
Then all will be well. There never was a bubble. Alan Greesnpan did not create the American prosperity, the BOOM, no, HARD WORKING AND INDUSTRIOUS AMERICANS CREATED THE WEALTH WE HAD ON JANUARY 1, 2000. Alan Greenspan, all GREEN with ENVY only meddled and destroyed that wealth. He can do us the favor by getting out of our way, and we, all of US will prosper again. Just watch next week, stayed tuned.
I am,
Truly your$,
-Crystal Ball
P.S. Sometimes I talk like this because Jeff Bezos is too kind hearted to say things like this. |
