Clinton also increased taxes again in 1993, an increase that was billed as the "largest tax increase in history" by the Bush administration (they fudged numbers to be able to claim this without "lying," but there it is).
I posted this in another thread. It's a link to my broker's (who does a finance show on 700AM) very encompassing review of the Fed's QE2 policy. It explains why in his view the move is good for stocks but bad in the long run. http://www.streettalkadvisors.com/XFactor/110510-QE-2-The-Hidden-Tax.pdf If it requires sign up, it's free and they don't sell you email. The reason I originally went with him was his ability to articulate his economic views and course of action. If you have to talk about it on the radio every night you better get your thoughts clear. But he is a staunch conservative and lives with the constant fear of taking care of protecting other people's assets. (And Clinton had the advantage of the largest Capital Gains tax collection of any administration in history)
Economists in foreign countries are unhappy with US policy because they want their own currencies to depreciate as well. The whole world is trying to depreciate its currency - it's not like the US is alone in this.
Then Bush eliminated Cap Gains tax altogether for a few years. I wonder how many rich people cashed out without paying a single dollar in tax.
Yes, they are mad that the US dollar is falling as a result of QE2. But the point of QE2 isn't to depreciate the dollar, it's a side effect. The US is not intervening in the currency market like other countries. QE2 is no different than lowering interest rates by other means.
I was able to read it. Where I disagree is where they are saying inflation is a bad thing. Not necessarily Right now, inflation is running UNDER where we want it, and that's not good. Too much inflation is bad, but too little is bad as well. As Bernanke said: "“Our purpose is to provide additional stimulus to help the economy recover and to avoid potentially additional disinflation which I think we all agree would be a worse outcome,” Bernanke said.
really don't think printing money is addressing the core issue of the economy. The core issue is not a problem with lending. The problem is that Americans realized they were spending in an unsustainable way, and so have cut back. You cannot stimulate the economy like that. People aren't willing to spend money. Policymakers seem to think we're going to go back to pre-bubble behavior, which is just not going to happen.
Certainly - my only point was that looking at what foreign countries think of the policy has to be done in the context of how its affecting them. Those countries aren't necessarily unhappy because they think it's a bad policy. They are unhappy because it's affecting them negatively. I tend to agree with this view. We're in the process of massive deleveraging as a country and that's a process that just takes time. There's no shortcut solution to this. It took many years to get into this mess and it will take many years to work our way back to economic health. All of this stuff - lowering rates, stimulus, etc - has one purpose: create jobs. Instead of finding roundabout ways to do that, I would propose one of two solutions if we want to stimulate: 1. Massive government jobs programs similar to the interstate highway system. Just flat out create the jobs. 2. Instead of messing with income taxes, etc - just give companies a tax rebate for hiring people. Make it cheaper for a company to hire someone that it is now - that means the person has to generate less revenue to make it worth it for the company and makes it in more business' interest to hire new people.
I'm not too keen on tax credit for hiring because it's similar to cash for clunkers, where you frontload the demand at the expense of what happens after the rebate runs out. It'll definitely create a nice boost, but there's no sure way of knowing whether those hires would've been created already. But I'll take that over what Bernanke's doing. Heck, I'll take any Congressional fiscal involvement that doesn't have anything to do with the Bush tax cuts...
I just don't see how inflating equity and commodity markets is really going to help. It's all paper stimulus. And we're just creating another bubble. Incentives have to be in place for companies to go out and hire the unemployed.
they were given an incentive to cut the fat. They saw that they could have the same productivity with a smaller work force. If this brings the start of a culture change in the USA then that is great.
The entire lifestyle is unsustainable given the relative demand for American workers versus the rest of the world. There is just very little additional value for the work done by the average American compared to the average worker anywhere else; and they don't have Mc Mansions, two cars, kids to send to college etc etc. Thats why I think globalization will bring Americans a large way back to the world average as it raises the world average up in small increments. The discrepancy between the two because we are such a small percentage of the total population.
I thought this was going to be a thread about Palin taking a cruise. Of the options, it seemed more her speed.
They aren't inflating equity and commodity markets. Those markets are going up because the market believes QE2 will actually work in rekindling demand.
Yeah, I wasn't disagreeing with you. I understand why these countries are complaining, but I can't feel too much sympathy for China, which pegs its currency to the dollar. They should stop pegging if they don't like it. Another thing, the US has been the world's customer for decades now. It has built up huge imbalances. Now that emerging countries have grown middle classes, they should take up some of the demand.
This is the debasement of the dollar. Commodities going up means harder times ahead for the poor and middle class. If we have an economy thats expanding, and upward pressure on wages, then its not a big deal. But I don't see wages rising, and in fact, I see downward pressure on them which would increase the problem. I just don't like the idea of inflation attempting to create the growth we need, especially considering how many people this can potentially affect.
The problem is a lack of demand. If commodities are going up because there is increased demand, that is a GOOD thing. Because increased demand will ultimately lead to more jobs and economic growth.
That's the issue. There's essentially no long term fundamentals behind these gains. QE2 isn't relaxing any constraints here. Interest rates are low as it is. Helicopter Ben is trying to sell this as "wealth" but it's just another bubble.
