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To: vpFREE@yahoogroups.com
From: Richard Boozer <reboozer@yahoo.com>
Date sent: Sat, 6 Nov 2004 21:53:55 -0800 (PST)
Subject: Re: [vpFREE] Re: XVP: Buy stocks now and get money to play VP!
Incredibly inciteful and well written!! I wish
everyone could see the truth this clearly!
--- vpanimal <vpanimal@hotmail.com> wrote:
One of the reasons is, at least for the 2000-2002
economic downturn,
that there's typically a 2 year lagtime for ecomonic
policy to fully
take effect. Things don't just immediately change
on Jan 20 when a
new president takes over. Any policy changes he may
enact usually
don't go into effect for 6-12 months, and it's
usually another 6-12
months after that before they make a real impact on
the economy.Look at our economy in the late 90's. It was slow
but steady in the
mid-90's. Then the tech boom hit in the late 90's
and the economy grew
too quickly, becoming overheated and setting itself
up for a big
crash. The NASDAQ was a great indicator of this,
soaring to a
rediculous 5000 in April 2000. By the time Bush
took office in Jan
2001, the NASDAQ had already plummetted half of it's
total value to
2500. It was a frieght train going south, and that
simply can't stop
on a dime. 8 months later 9/11 hit and kicked the
legs out from under
any recovery that might have been in the works.It was 2 years into Bush's term (April 2003) before
we got the freight
train slowed and turned into an upward direction. I
for one think he
did a masterful job of getting the economy to
rebound after the double
whammy of the tech bubble bursting followed by 9/11.
We could have
tumbled into a 10-year depression like the 1930's if
it weren't for
strong leadership and economic stimulous in the form
of tax cuts.Regarding the deficit, that's always been a simple
product of the
economy. When the economy goes through a robust
stretch, deficits get
paid down and (if the robust stretch lasts long
enough) we end up with
a surplus. The opposite is equally true. When
there's a bad stretch
in the economy, revenues drop, surpluses run out and
we end up in a
deficit situation.The key is how you respond to bad stretch in the
economy. Being
afraid of running a deficit and therefore raising
taxes is the worst
possible approach. Higher taxes shrink the ecomony
(less money in
people's pockets to spend) while tax cuts grow the
economy. It's the
basic WalMart philosophy... you generate higher
revenues when you
lower prices on higher volume than you do by raising
prices on lower
volume. It's even more effective in a broad economy
where those extra
dollars in consumer's pockets spend multiple times.
Customers buy
more, which causes busineses to hire more employees,
which themselves
become consumers who buy more, and so on. Higher
taxes have just the
opposite effect, and you spiral downward instead of
upward.Unfortunately there's no way to avoid deficits
during such a "recovery
phase". But deficits take care of themselves if you
are successful
in growing the economy into another robust stage.
Increasing tax
rates by 10% won't raise enough revenue to pay off
deficits. Raising
tax receipts (i.e. the volume of taxes transactions)
by 30% will.Those people berating Bush (or any other president)
for the economic
results of the first 2 years of an administration
are not
understanding the whole picture. The last 2 years
and the next 4 will
provide a much better measuring stick.