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.

Non-Tech : Deflation -- Ignore unavailable to you. Want to Upgrade?

To: Ahda who wrote (183)	11/21/2002 6:17:00 PM
From: Maurice Winn	Read Replies (1) \| Respond to of 621

Hi again Darleen. I'm a retired investor in shares. I don't have a business. With interest rates cuts, the main change is reduction in tax collections. Combined with the capital gains tax losses, the effect has been an enormous tax cut! But as far as revenues staying constant but interest costs decreasing, remember that the people with cash such as QUALCOMM and Microsoft have had a serious loss of income from interest. Which means their tax bill goes down commensurately. Not everyone is a borrower. Borrowers = lenders in exact proportion, just as sellers = buyers in the sharemarket. When people say of the sharemarket, "Everyone is selling", that's not true because every share sold is bought by somebody, so it would be as true to say "Everyone is buying". Because governments are a drain on economies [other than when they do good things such as defend the realm, protect people and private property, prosecute fraud, allocate public resources and a few other things], a big tax cut through interest rate cuts is a good thing economically, though some are winners and some losers in the process. But there's the sneaky process of printing a big bunch more dollars which the government gets to spend, which is a hidden tax on everyone who holds dollars, because they are diluted. That game only works while the realm of the US$ increases and productivity increases so printing can continue without inflation. The lower interest rates have enabled people to borrow a lot of money and order production with the promise of paying back later from future income. So business has been spurred. Production has been brought forwards to now, from when borrowers would otherwise have been able to spend. They'll be able to buy less later, in favour of buying now. Which is a good idea if there's spare productive capacity now, which there is. Mqurice