Stockman Scott's Political Debate Porch Message Board

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Politics : Stockman Scott's Political Debate Porch

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To: T L Comiskey who wrote (8934)	11/7/2002 10:34:47 AM
From: Jim Willie CB	Read Replies (1) of 89467

neither lower rates nor money injections stop deflation this is a major misconception now it only slows the speed of the contraction and further distorts every imbalance within the economy why? because neither lower rates nor money injections remove debt on balance sheets they help to pay them down, but not eliminate them they make some debt cheaper to service so until the Fed invents a way of cleansing 150 million household balance sheets, 5 million corporate balance sheets, and the federal balance sheet.... DONT MATTAH in the last few days I finally began to hear some astute arguments that lower rates are hurting fixed income earners who have saved all their lives maybe soon the press/media will conclude that lower rates reduce consumer spending $1100B interest income, $600B interest payments in 2001 today the bank sector was downgraded by a major brokerage they cited reduced profit margins from lower rates this is what I refer to lower rates hurt the entire economy, forcing it to contract and shrink further the incompetent economic policymakers will now repeat the Japan error and reduce rates further, until ZERO but not in USA, it will be until at the CRITICAL BASE where foreigners say ENOUGH, OUTTAHERE then we have a bond crisis coupled with dollar crisis lower rates beget still lower rates the Fed was forced into this decision politically it is not as though they can regret it such policy has worked for 30 years but it fails when debts and overcapacity hang over the market like a two-ton blanklet, as in NOW by late winter and spring, it will be evident that the economy still is not in recovery, languishing and stuck in a stall Christmas retail sales will be a killer / jim

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