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Politics : Foreign Affairs Discussion Group -- Ignore unavailable to you. Want to Upgrade?

To: michael97123 who wrote (158369)	2/22/2005 1:44:44 PM
From: jttmab	Respond to of 281500

Dont think low interest rates could have done the job by themselves, thats the difference in view between us. Bush put a hell of a lot of cash into the hands of all americans. Remember the two rebate checks? I remember the rebate checks and I also remember that only half of taxpayers got any checks at all and those who did that were closer to the bottom got substantially less than the $300/check. Right off the bat, change "all americans" to "half of all Americans" and then start discounting at the lower end. You seem to have also overlooked that when those checks came out, there was no substantial increase in consumer spending. Those "checks" never showed up in consumer spending. Further you could look at either the Reagan years or the Clinton years which both had tax increases and tax decreases. In neither case was there any substantial bump in either direction in the economies at the time of the tax cuts of tax increases. On the other hand, home ownership in the US is around 60% as I recall. If you're refinancing or buying a new house where the interest rate is, e.g., 2% lower, how much does that reduce your annual cost of housing and increase your disposable income. I would suggest that's a lot much than $300. Then there's the churning of bank fees, equity lines, etc.. You should also remember that the savings rate isn't all that spectacular, meaning that Americans are going into debt to purchase all those items for those new houses. Of course, paying interest on the national debt isn't all that bad when interest rates are low. So when they return to normal levels the Fed will be trading in those treasuries for new treasuries at higher interest rates and you can watch the interest on the debt baloon. Another major factor that I forgot to mention was the value of the $US, which has plunged against other currencies making US exports a lot more attractive. Again a major factor that the Executive has no control over. I will continue to repeat this mantra when asked because it is a core belief of mine. I am not an economist however and i know its very hard to quantify. I dub thee a true believer. jttmab

To: michael97123 who wrote (158369)	2/22/2005 1:44:45 PM
From: jttmab	Read Replies (1) \| Respond to of 281500

Dont think low interest rates could have done the job by themselves, thats the difference in view between us. Bush put a hell of a lot of cash into the hands of all americans. Remember the two rebate checks? I remember the rebate checks and I also remember that only half of taxpayers got any checks at all and those who did that were closer to the bottom got substantially less than the $300/check. Right off the bat, change "all americans" to "half of all Americans" and then start discounting at the lower end. You seem to have also overlooked that when those checks came out, there was no substantial increase in consumer spending. Those "checks" never showed up in consumer spending. Further you could look at either the Reagan years or the Clinton years which both had tax increases and tax decreases. In neither case was there any substantial bump in either direction in the economies at the time of the tax cuts of tax increases. On the other hand, home ownership in the US is around 60% as I recall. If you're refinancing or buying a new house where the interest rate is, e.g., 2% lower, how much does that reduce your annual cost of housing and increase your disposable income. I would suggest that's a lot much than $300. Then there's the churning of bank fees, equity lines, etc.. You should also remember that the savings rate isn't all that spectacular, meaning that Americans are going into debt to purchase all those items for those new houses. Of course, paying interest on the national debt isn't all that bad when interest rates are low. So when they return to normal levels the Fed will be trading in those treasuries for new treasuries at higher interest rates and you can watch the interest on the debt baloon. Another major factor that I forgot to mention was the value of the $US, which has plunged against other currencies making US exports a lot more attractive. Again a major factor that the Executive has no control over. I will continue to repeat this mantra when asked because it is a core belief of mine. I am not an economist however and i know its very hard to quantify. I dub thee a true believer. jttmab