From: PhaedrusWolf@aol.com
Date: Thu Dec 09 2004 - 17:36:23 GMT
In a message dated 12/9/04 11:00:38 AM Eastern Standard Time,
markheyman@infoproconsulting.com writes:
Your last paragraph, pasted above, says a lot. I would suggest,
however, that in any crashing economy, most people are UNABLE to
spend; it's not a matter of being unwilling. And I agree with your
"So far anyway."
Hi msh,
I agree. I tend to believe as the Hindus do on this. There is a natural flow
of money back to yourself. By spending, you create this natural flow, by not
spending, corporate America is creating the economics they are having to
live with. Business to business spending means as much as consumer to business
spending in that business to business spending creates jobs that allow consumer
spending. The Gov is doing what they can by keeping interest rates low,
buying bonds on the open market, and adding money with tax breaks. Businesses
tend to worry about their quarterly statements more than their long-term
benefits, but still, the low interest rates create borrowing by the businesses,
which in turn increases cash flows.
One place consumers are adding to the bad economy is by selling stocks and
buying cash like investments with high tax consequences. If the withdrawals are
for spending purposes, then it helps the economy, but if the consumers are
only pulling out money from the stock market to hoard this money until the
stock market looks better, they are only prolonging the effects of the recession
that has hit from the bubble bursting. These are of course only those
consumers who have saved up to this point. Those who recognize long-term value, and
buy when the market is down, as opposed to sellout out of fear, this in
itself provides equity capital that increases cash flows.
Ironically, it is the small investors who are supporting the economy by not
selling stocks; at least the ones without the institutional investors in their
pockets.
Imagine what it would have been like had we not had these safety nets. Even
though Keynes didn't intend on his thoughts as a guideline for the Gov, we
must feel it was DQ. Huh?
Chin
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