Graham and Doddsville -- Value Investing In The New Era Message Board

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Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era

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To: porcupine --''''> who wrote (1205)	2/7/1999 7:04:00 PM
From: Freedom Fighter	Read Replies (1) of 1722

Porc, >>Milton Friedman has written that there is no reason why the U.S. cannot resume the 4% to 6% average annual growth rates it enjoyed for much of its economic history, if (admittedly a big if), taxes are reduced to pre-New Deal levels.<< I'm not sure what the pre-New Deal growth rates were, but I vaguely recall some numbers about the averages from the Mises Institute (pro free markets) that were higher than current estimates but lower than 6%. Maybe 4%+ >>I don't expect taxes to ever go that low again, there is hope that the government's portion of the economy will decrease, going forward, from the current 40% level, thereby freeing up resources that would allow the private sector to grow at a rate faster than the current 3.5%.<< Actually the current official estimates are 2.5%. This includes the Fed's estimate. The 3.5% upper range long term average is the assumption that comes from the more optimistic Wall St. types that have a vested interest in rationalizing things. So I am suspicious. I think the current sum of Federal, State, Local and miscellaneous government is higher now than ever despite all the rhetoric from Regan/Bush/Clinton about reducing government. So my guess is that we are stuck in 2.5% - 3.5% range as a very long term estimate. From a valuation point of view I think it's a mistake to assume more. Wayne

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