Market WrapUp (05-06-03)

Financial Sense Online ^ | 5/6/03 | Jim Puplava

[arete]

This expansion of debt and consumption gets back to classical economics, which is based on prosperity and linked that prosperity to savings and investment. We don’t save and invest anymore in this country. We have replaced the concept of savings and investment with debt and consumption.

The emphasis in government and monetary policy is to enable American consumers to borrow more and spend more money in order to grow the economy. The emphasis for the last half-century has been on expanding credit and debt, and increasing consumption. The result is that we as Americans save little, invest little and consume a lot. We are, in effect, consuming all of our seed corn.

Contrary to what so many now believe, you cannot borrow and spend your way to economic recovery or prosperity.

Richard W.

[arete]

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Today's Roger Arnold Show

Richard W.

[MonroeDNA]

The DOW broke 8500.

You work for Reuters, right?

[JNB]

I find it funny how people think the DOW breaking 8500 is a big thing, it is just a blip. Did the DOW break 8500 this week? Yes, but it also broke 8500 5 years ago for the first time.

[palmer]

The DOW broke 8500.

And it will probably break 9000. Eventually it will be back under 6000 see chart

[Gritty]

“…the purpose of taxation is never to raise money, since the government can raise all the money it needs by printing it. The true purpose of taxation is to leave less in the hands of the taxpayer…" - Ludwig Von Mises

I thought this little gem needed repeating!

[arete]

They have done a very good job of leaving less in this taxpayers hands.

Richard W.

[steveegg]

Classic Puplava. This ought to be required reading for everyone, whether or not they're in the market, near the market, or in some cottage in Montana.

[steveegg]

Did you actually read this, or are you assuming that just because the markets are right back where they were 5 1/2 years ago, that everything's all right? Most of the "prescriptions" being offered by the politicians are very similar to that tried in 1930, debt at all levels is completely out of control, and ALL of Clinton's taxes are still slated to return in full force in 2011.

The only "good" news is that the rest of the world is in even worse shape.

[steveegg]

I'd throw the second part in as well...

"If capitalists are faced with the likelihood that the income tax or the estate tax will rise to 100% [prior to John F. Kennedy the tax rates were as high as 90%], they will prefer to consume their capital funds rather than to preserve them for the collector…. Today taxes often absorb the greater part of the newcomers “excessive profits. He cannot accumulate capital; he cannot expand his own business; he will never become big business and a match for the vested interests. The old firms do not need to fear his competition; they are sheltered by the tax collector. They may with impunity indulge in routine, they may defy the wishes of the public and become conservative.” And finally, “Profits are the driving force of the economy. The greater the profits, the better the needs of the consumers are supplied…He who serves the public best, makes the highest profits. In fighting profits governments deliberately sabotage the operation of the market economy.” Ludwig Von Mises, Human Action, p. 800-807

Puts Enron/WorldCom/Global Crossing/et al in a new light.

[arete]

Ironically, I feel less secure with the markets going up than I did with them going down. I guess with them going down, they were at least acknowledging the problems.

Richard W.

[DarkWaters]

Then there is the dollar. Still falling and a little to fast for my liking. It seems that foreigners are beginning to wake up. Not good.

[steveegg]

Ironically, I feel less secure with the markets going up than I did with them going down. I guess with them going down, they were at least acknowledging the problems.

That would be an interesting way to look at it; however, I don't think they were acknowledging problems as much as they were driving it down to further shake confidence in the economy as a whole.

I personally look for a 4th-quarter bloodbath to extend through, say May 2004. All of the same economic players that cost Bush I in 1992 are back, and private debt simply exploded over the last decade.

[Marianne]

Thanks for posting.

[EVO X]

I personally look for a 4th-quarter bloodbath to extend through, say May 2004. All of the same economic players that cost Bush I in 1992 are back, and private debt simply exploded over the last decade.

At some point, the turkeys at the Fed are going to have to defend the dollar. I don't see how letting the currency fall off the cliff is good for America in the long run...

[arete]

You're welcome.

Richard W.

[dalereed]

"I don't see how letting the currency fall off the cliff is good for America in the long run..."

Are you sure that the fed doesn't want the US to fall off the cliff and become a 3rd world country?

[SierraWasp]

Excellent question!!!

[Concentrate]

Hey Taxi Driver! Freep mail me here.

This is is where I hang out and you are very welcome here.