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 : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: Rmn who wrote (394)	1/3/1998 10:59:00 PM
From: Zeev Hed	Read Replies (1) \| Respond to of 9980

Government surplus soak money from the economy, thus reducing overall demand. When such shift in funds occur rapidly they cause major dislocation that amplify the effect of the decline in demand. When transitions occur slowly, capital has time to redirect itself to more productive activities and thus can cause replacement of government demand by private sector demand. The best solution, IMO to our current excessive debt, is not so much a budget surplus, but creation of relatively minute surpluses in good years and relatively minute deficits in bad years, keeping the debt growing at 10% of the growth of the GDP, until it eventually becomes (over 20 years) a much smaller portion of the GDP. Strangely enough, we actually need to have government bonds as a store of value (a good replacemnt for gold), otherwise, excess savings will have no place to "park" and will start to find its way to unproductive uses. Zeev Zeev