New US Economy Policy Message Board

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Strategies & Market Trends : New US Economy Policy

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To: Arthur Tang who wrote (74)	10/31/1997 10:12:00 AM
From: Arthur Tang	Read Replies (1) of 435

What mortgage interest did to this new economy? The new economy is not controlled by Feds is more evident each day. The banks still charge more interest on mortgage due to overnight discount rate increase this march. But the mortgage lenders scooped the banks and moved a lot of customers off their high 13% interest to a recent low of 7.21%. Any one going for the low mortgage interest with a differential of 1% can put $100/month cash in savings. The savings from mortgage monthly payments, fuel the housing part of the economy. The growth of 10% was dampened by Feds for a short period and will proceed to perform quite adequately. The economy from main street to wall street will continue to be fueled by this new liquidity. Deflation in products and services derive higher earnings and better equity value. Bonds will yield less in the future but old bond prices will increase in value. Monetary policies of old, using CPI and other indexes are no longer suitable. With all the liquidity squeezed out of interest payments from credit cards, prime lending rates of foreign banks, trade credits, and with astute buying habits, this new economy will continue to grow for many years to come.

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