New US Economy Policy Message Board

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Strategies & Market Trends : New US Economy Policy

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From: Arthur Tang	12/16/2006 4:57:00 AM
	of 435

The major difference in the new economy is that top-down economy is no longer viable. The economy is controlled by micromanagement of businesses. If companies all make a profit, then the economy will prosper. For companies to make money easily, monetary policy has to be steady, set at 3.5% growth. This of course depended on population growth. Without population growth, there is no demand growth. And the monetary policy will only fuel inflation. It was the common fallacy(devaluating the dollar) of central banks in the past. When there is no population demand growth; product obsolescence and repalcement creates demand. This year, the business is good, because of all the triple play, ivideo, and gamers, etc. So, how did we micromanage the companies. The natural way is the stock exchanges, which sets rules and regulations to qualify the companies for listing. Then the P/E ratio determines the approval of the company business plans. And stock value tells the company management whether they did things right or not. Then the domino effect takes over the private companies doing business with public companies. It is that easy to manage the new economy.

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