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 (102)	1/13/1998 2:39:00 PM
From: Arthur Tang	Read Replies (1) of 435

The new economy and FED's monetary policy for a $10 trillion dollar economy? The new economy is changing the traditional monetary policy. The liquidity is now some what provided by foreign bank loans (libor rates) to the US companies. Trade credit by foriegn suppliers can have terms of 3-4 month for payments. Profits of 5% of revenue adds to the free cash for new investments. Rebuilding of capital through stock appreciation is a major improvement. Government budget achieving balance relieves the refunding expenses. Feds will hold the overnight discount rate at 5% for the higher $10 trillion dollar economy. Multiples on bank deposits will remain about the same. Periodic adjustment of adding and draining liquidity to fine tune the economy will be the same as 1996-1997. Liquidity for housing projects or land development will be funded by the pay out of 30 year mortgages with compounded interest profits. Productivity improvements from document management with computers will continue to provide extra earnings to fuel the 20% increase in our new economy.

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