Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Strictly: Drilling II -- Ignore unavailable to you. Want to Upgrade?

To: isopatch who wrote (788)	8/28/2001 4:05:18 PM
From: Roebear	Respond to of 36161

Good move on gg iso, you beat me on that one, I was too busy posting (who says it doesn't cost anything!)ggg. Here's one from Jude W: Taxes and Deflation Memo To: Bob Novak, Chicago Sun-Times From: Jude Wanniski Re: 10 Runs, 10 Hits, 1 Error Nice column on “Dr. Greenspan’s Medicine,” except for one error. Cutting the capital gains tax will not increase the supply of liquidity in the system. It will increase the DEMAND for liquidity.... and when it is not supplied by the Fed, the price of gold will fall and the deflation will be worse!! You should be careful in following the logic. If state and local taxes are reducing the demand for liquidity, there will be more of it in supply, and the price of gold will rise. A big tax increase would end the deflation, but replace it with a contraction. See? The only way to solve the problem is to devalue the dollar against gold. Your column also makes it appear that in 1996 I forecast the deflation that is "coming," when in fact I forecast the deflation that began in 1997, first hitting commodity producers, now catching up to the rest of the economy. Real property has already taken a hit in commodity producing areas. Angell does not understand deflation if he says there is only a 15% chance of a decline in real property prices in the other sectors. There is a 100% chance. Note Larry Lindsey saying laid-off workers are being rehired at slightly lower wages. When they run out of home equity to borrow against, they will have to walk away from their mortgages. The adjustment process to a monetary deflation is automatic. I talked to my Mercedes dealer this morning when I dropped the car off for service. He tells me they are having to discount to move cars and their profit margin has shrunk to 6% from a normal 18%. He agrees that other carmakers have had to give their cars away to make room for the new models, and the result has been a collapse of the used car market. supplysideinvestor.com Best Roebear