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Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: DuckTapeSunroof who wrote (410167)	5/29/2003 3:05:08 PM
From: JakeStraw	Read Replies (1) \| Respond to of 769670

President Clinton’s 1993 tax increase, raised the highest marginal income-tax rate to almost 39%. I’m sure it has never been explained to him that the consequences of that increase were transmitted in different ways to the national and global economies. This is because the rise in marginal tax rates caused a decline in the demand for dollar liquidity, as there would be less need for liquidity with less production at the margin. Put another way, when tax rates rise higher than they need be, there is less production and less exchange of goods and services produced. There is then less need for "money." We use the term "liquidity" to mean all forms of government "debt" that pay no interest, the cash in our pockets and purses and the bank reserves that sit in the bank computers or ledgers and can be converted into cash. Government debt that pays interest, bills and bonds, are "illiquid," in the sense they first have to be converted to liquid money to exchange for goods or services or for other financial assets. The objective indicator is the price of gold, which had been fluctuating around $350 since 1985. When the Fed did not withdraw the surplus liquidity in the banking system by selling bonds from its portfolio, the gold price rose 10% to roughly $385. The Clinton tax increase, in other words, was the cause of an inflation that eventually would have driven the general price level up by 10%, as it already had put upward pressure on the world oil price and other commodities. Before all other prices could “catch up” with gold, however, gold began its long decline to $255, then climbing to the $305 level. The gold DECLINE with the 1997 Tax Act, which reduced the capital gains tax to 20% from 28% and made important supply-side changes to pensions and estate taxes. That is, the positive changes in the tax law made the economy want to expand to higher levels of production and exchange. It needed more liquidity, and when the Fed did not supply it, the economy had to make do with the existing money stock, which meant each dollar became scarce to some degree relative to real things, with gold the best proxy for all real things. It took fewer of these scarce dollars to buy gold, so the dollar-gold price fell. Deflation!!

To: DuckTapeSunroof who wrote (410167)	5/29/2003 6:17:23 PM
From: CYBERKEN	Read Replies (1) \| Respond to of 769670

Patsy, your useful idiocy is showing again. The Clinton/Rubin deflation dates from 1996, and it took 3 years for it to slow down the Reagan Boom enough to be noticed by the public. Bush has begun to implement the necessary medicine, with Tax Cuts I and II. Tax Cut III, in an election year, should help a lot too. As well, the world's most glorified clerk, Alan Greenspan, has been wised up by the new adults in charge. But what the Clinton/Rubin cancer brought about will not be cured overnight. The process goes on, with the news being that Bush-unlike what the Gephardt Depressionists hoped for-will not be stopped...