Replies to post #42990 on Zeev's Turnips Patch-No Politics (ZEEV)

[Lane Hall-Witt]

Alex G--

Thanks for posting this analysis. I would quibble with some of the details of his understanding of money and wealth creation, but I think his sense of the big picture is dead on -- on the money, so to say. Well worth the time invested to read it!

[goodluck]

Alex,
Thanks for posting the Mises article. Parts of it sound like he lifted some of Zeev's musings from this thread, e.g., the opening paragraphs:
"Frank Shostak: Actually, it [yesterday's rate cut] is a disastrous move, so far as I'm concerned. Last year, the Fed cut interest rates 11 times. Why anyone should believe the 12th is the charm is beyond me. From the end of last year until now, the federal funds rate was 1.75 percent, and now we have a very aggressive lowering by half a percent to 1.25 percent.

This indicates desperation. It shows that the Fed believes the economy is doing poorly, more poorly than is usually reported, but that they have no idea why or what to do about it."

If he is right in saying that "What we need if we want recovery is a big liquidation of capital goods, to normalize it with the consumer goods sector. And in the consumer sector, we need a reduction in the durable goods production relative to non-durable goods production. The Fed should not attempt to forestall that" then the US is in big trouble, as the Republican prescription for this and every other economic ill is to lower taxes, especially for the wealthy, in order to create a larger pool of investment funds. This is exactly what we don't need right now.

Maybe their total control of the govt will lead them to lower taxes on middle and low income people, but I doubt it. I think we will in the end get the worst of all possible policies for our current situation, which will lead to a continuing sinking economy and will somehow be blamed on Clinton, Democrats in general and Al Qaeda.