PRESIDENT GEORGE W. BUSH Message Board

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Politics : PRESIDENT GEORGE W. BUSH

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To: sylvester80 who wrote (441530)	8/12/2003 12:29:53 AM
From: Ga Bard	Read Replies (2) of 769669

Why is it that DEMOcratics never ever have real hard core facts... only ridiculous questions and spin to substitute for facts. Look Bill Clinton was the beneficiary of economic factors and situations that he had nothing to do with what-so-ever. 1)What about capital from Asia entering US capital and stock markets. Poor earnings of Asian companies coupled with extreamly low interest rates (rates as low as 1% on Japanese Gov't notes) caused Asian investors to put their money into US stocks and bonds. A cash surplus flowing into capital markets kept interest rates at bay thus allowing US companies to undergo projects that they would not otherwise undertaken. It was these corporate endeavors that kept people employed. Thus there is the accounting to counter the spin about DEMOcrats low unemployment rate. The low cost of borrowing allowed more "meat" to be left on corporate bottom lines. Those profits drove private investment in US companies. Thus welcome to oue bullish stock market, which was a reflection of our strong economy during the Clinton years. Foreign cah influx also held other currencies down against the dollar. Thus that made foreign products cheaper which resulted in holding down inflation (increased productivity of the American worker is also a cause of low inflation at a time of high employment. 2)Increased rate of retirement savings in the US. People were and still are starting to realize that Social Security is a scam. The Federal gov't knows this also. This is why they have given us so many other retirement savings options (IRA's, 401k's, KEOGH's, etc...). This increased flow of cash into capital and stock markets has a similar effect to that of foreign capital inflows except that it does not effect exchange rates. 3) A hawkish Federal Reserve. I'm not sure if I like the Fed as an organization but I will say this; Alan Greenspan and the other FOMC board members that elected to raise the discount rate (rate at which banks make overnight loans to each other) in 1995 have had more to do with our current strong economy than Bill Clinton could even dream to take credit for. This is a very complicated area and would easily take three typed pages to address properly. But what basically happens is the Fed controls the supply of money in the economy by buying and selling gov't notes on the open market. Less cash met with unwaivering demand for that cash causes interest rates to rise. Banks' reserve requirments (the amount of cash that a bank must have on deposit for every dollar of loans that it has outstanding)are tied to a specific interest rate know as the discount rate. The higher interest rates are the less money banks may loan out (Paul Wozniak, I know this isn't exactly correct but it makes a link of interst rates to the reserve requirment without going into too much detail). A reduction in outstanding loans obviously results in decreased spending. Why would the Fed want to reduce spending? Isn't that what makes a strong economy? Yes, but only to an extent. If cash supply continues to increase with no increase in REAL value created in the economy you have inflation. EX: Say there are only two dollar bills circulating in the US economy. Those Bills represent all of the value that exists in the economy. Now say the Gov't prints one more dollar bill. Value inherent in the economy hasn't increased but now there are three bills that represent that value. In other words, where one bill once represented 50% of the value in the economy it now only represents 33%. That's inflation. If you made it this far through this very dry discussion of how the Fed effects interest rates/inflation I'll now let you know that the reason for all of this is to inform you that Clinton opposed raising interest rates in '95 (may have been '94). So as Clinton is taking credit for the economy he has forgotten that he opposed actions by the Federal Reserve that have lead to the current strong economy (opposing raises in rates is much more politically correct. Raises in rates slow down the economy that is making things good for everyone at that time. What Clinton and the other Democrats forgot about is the inflation that would have followed). Clinton was elected into a windfall where Bush was elected inot an economic nightmare. "=) Gary

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