Warren Buffett Says its Fair to Raise Taxes on Rich

[Toro]

Fiscal policy was NOT the reason we had a boom during Clinton.

Monetary Policy helped; Greenspan kept rates low through important parts of the 1990's.

The internet boom did the rest.

That economy had NOTHING to do with fiscal policy.

Actually, it did.

Bonds rallied and interest fell once the bond market realized Clinton was serious about fixing the deficit.

And lower interest rates helps the economy.

 

[JeffWartman]

Actually, it did.

Bonds rallied and interest fell once the bond market realized Clinton was serious about fixing the deficit.

And lower interest rates helps the economy.

Of course...but you understand that it was monetary policy at the time which helped to lower interest rates, right?

 

[red states rule]

Economy shakes off winter lull
By Patrice Hill
July 7, 2007

The economy resumed healthy growth during the spring after a winter lull, an employment report confirmed yesterday, with 132,000 jobs gained last month and a nearly 4 percent rise in wages seen over the past 12 months.

Most of the new jobs were in services such as education, government, health care and restaurants, while manufacturing and retailing posted further large declines of 18,000 and 24,000 jobs apiece, the Labor Department report showed. Employment in construction ticked up by 12,000 despite the housing recession thanks to strong public and commercial building projects.

The job growth was enough to keep the 4.5 percent unemployment rate from rising, but not so much as to draw it down further. Adding to the upbeat tone of the report, job growth in April and May was substantially higher than previously reported at 122,000 and 190,000 respectively.

Stocks rallied on the news, with the Dow Jones Industrial Average gaining 46 points. Interest rates jumped in the bond market, however, as the report signaled stronger growth and inflation ahead. Scattered shortages of skilled workers helped stoke the solid rise in wages and hours and, along with surging oil prices nearing record levels in London, stoked worries that price pressures are heating up.

for the complete article
http://washingtontimes.com/apps/pbcs.dll/article?AID=/20070707/BUSINESS/107070021/1001

 

[Toro]

Yes, the fed funds rate was in a general downward trend during the 1990s though it was rising at the end of Clinton's term.

But remember James Carville saying that when we died he wanted to come back to life as the bond market so he could scare everyone, or Slick Willie exhorting "You mean my Presidency is in the hands of f****** bond traders."

Monetary policy mostly effects the short end of the curve. The market effects the long end. The bond market is most concerned about inflation. Government deficits are inflationary. If bond investors believe inflation is coming, then they sell bonds and long-term interest rates rise to a point where investors are compensated for the risk of inflation. If the market believes inflation is going to fall, then they bid up the price of bonds and interest rates fall.

A fiscal deficit increases the supply of bonds. As with any market, increased supply means lower prices. Interest rates are inversely related to the price of bonds, so prices fall and interest rates rise when the supply of bonds increases without a corresponding increase in demand. Vice-versa, as supply is taken off the market, prices rise and interest rates fall. Budget surpluses reduce the supply of bonds for investors, and thus prices rise and interest rates fall. Falling interest rates are good for the economy, so budget surpluses - and thus tax increases - can have a positive effect on the economy, depending where you are in the cycle.

This is what was happening under Clinton, and should be happening under Bush but is not for dogmatic and political reasons.

 

[red states rule]

Dems and the liberal media rant how the Bush economy stinks - yet he has the same or better economic numbers then Clinton

 

[Toro]

No, not really.

- wages have been stagnant or growing slowly for nearly five years.
- job creation has been slower this decade than last decade
- GDP growth has been slower
- capital formation has been lower this decade than last.

There are many mitigating circumstances which have nothing to do with Bush or Clinton - in fact, most factors have/had nothing to do with either President.

But political hacks on both sides of the aisle will take credit or pass blame for things they have little or no influence over.

 

[red states rule]

No, not really.

- wages have been stagnant or growing slowly for nearly five years.
- job creation has been slower this decade than last decade
- GDP growth has been slower
- capital formation has been lower this decade than last.

There are many mitigating circumstances which have nothing to do with Bush or Clinton - in fact, most factors have/had nothing to do with either President.

But political hacks on both sides of the aisle will take credit or pass blame for things they have little or no influence over.

is this is a bad economy - please give me more

In fact lets have more tax cuts - cut off the insane spending Dems want - and fuel the economy even more