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Strategies & Market Trends : ahhaha's ahs -- Ignore unavailable to you. Want to Upgrade?

To: ahhaha who wrote (922)	1/30/2001 4:10:13 PM
From: David R	Respond to of 24758

RE: too much in precious metals Actually, doing slightly more precise math, I have ~ 6%. I suppose that I am overly paranoid, but it does seem prudent to have a hedge against the worst, no matter how improbable. Certainly, gold is a good hedge against inflation. Also, at record lows, gold does seem to be rather overlooked these days. If the dollar does begin to lose its appeal, then I suspect that gold will become more attractive as a reserve. IMHO: I never bought into the "new economy" talk. In a difficult situation, gold will be seen as "safe". Just because "safe" is not on many lips these days, does not mean that safe investments are not rational or prudent.

To: ahhaha who wrote (922)	1/30/2001 10:34:38 PM
From: ahhaha	Read Replies (2) \| Respond to of 24758

So you doubt that people don't continue to make the mistake that interest rates are rigidly connected to money supply? To:George S. Cole who wrote (68027) From: Zeev Hed Tuesday, Jan 30, 2001 8:36 PM View Replies (1) \| Respond to of 68053 ... One outcome could be the judicious use of both fiscal and monetary policies. I for one like what the feds are doing to allow immediate injection of money into the system by lowering rate, Wrong. Lowering the rate only makes reserve costs to banks lower. In a declining economy the demand for reserves is declining also, because the demand for loanable funds is falling. but I think that if we implement a very large tax cut in conjunction with that, it may force the fed's six months hence to start a new cycle of tightening. Wrong. Fiscal policy couldn't even begin to be felt until 2002 and even then the effect would be extremely mild. Also, that's on the assumption that the Democrats don't hold out for a faster debt amortization. I would rather see a gradual tax reduction scheme, in essence, keeping the budget surplus in the range of $50 to $150 B year, without making a very sharp "U" turn in which a lot of tax relief ends up putting pressure on prices, This is a Democrat's argument. How could allowing people to keep more of what they earn cause upward pressure on prices? This guy hasn't even made a simple calculation. If the current portion of all of Bush's tax cut was made available immediately in cash, $170 billion, that represents 2% of GDP. Some stimulus. That wouldn't and couldn't cause inflation and it wouldn't bail the country out of recession. The whole tax cut released immediately would not cause inflation. These guys have to learn what inflation is. Somehow they think it's too much money chasing too few goods. Anybody want to buy an SUV? They got 10,000 acres of them. I will define what causes inflation. It is when the people demand more in compensation than the value of the output they are willing to create in whatever machine leveraged way. The machine leverage is always factored out because everyone gets the same machines if they want to be competitive. That's AG's WinXXX error. forcing the feds to tighten again and get us into a real recession and budget deficits. I guess we aren't in a "real" one. This is just practice for the corker. It's clear this guy has no knowledge and no confidence in what people get up and do every day. He should try for a job at the Fed. I find that every time we do a drastic change in taxation or spending we create new imbalances, gradualism, on the other hand allows all market participants to change their own business planning to changing conditions without "dislocations". The only mild tax cutting took place in Reagan's first term and it didn't have any of the consequences in the above claims. In contrast, we've had many tax increases over the last 4 decades and they haven't made any immediate change either. That's why people went along with tax increases. The effect of tax increases is slow just like with tax cutting. IMHO, the best approach to tax relief (which will also maximize end demand) Tax cutting doesn't noticeably effect "end demand". It only makes a given effort more efficient. It doesn't guarantee that the same effort will be applied, although what has been observed is that people put out more effort because they can see they will retain more. When you have to give a good chunk to the government you have an immediate disincentive to make any marginal effort for more. This is beyond the comprehension of Democrats. They don't represent entrepreneurs or individuals struggling to run a small business. would be a gradual yearly shift of the transition between the 15% tax bracket and the 28% (with a slower increase of the threshold for the 15% bracket, for instance through increases of personal exemptions) until the 28% bracket is eliminated. That will give all tax payers (almost all tax payers) the same tax break, but will concentrate the funds reinjection" into the economy where most will go to revive consumption or rebuild consumers' balance sheet. The purpose of tax cutting is not to stimulate final demand and the worst way to use tax cutting is to apply it to that end. The right way to cut taxes is to cut the taxes of the rich. This has the effect of benefiting everyone but it benefits the low end the most. The point is to cut taxes on capital and get revenues from taxing consumption. If this is done, as both the Reagan and Kennedy tax cuts proved, the level of output rises and so everyone benefits. Cutting taxes to stimulate consumption is bonehead, because once the stimulus is gone, and the economy has adjusted to a lower output, the net is the same position before the tax cut. The idea is to force cut taxes into productive assets, not to squander them on consumption.