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Group:
Doesn't this mean that the banks then either get their money
(interest on debt) from us--or our properties (default on debt)?
Chas
-----Original Message-----
From: Richard C. Fredette <sail4@xxxxxxxx>
To: Realtraders@xxxxxxxxxxxx <Realtraders@xxxxxxxxxxxx>
Date: Sunday, July 25, 1999 11:56 PM
Subject: Re: GEN: Y2K EXTREMISM?
>Bruce, Good analysis. Shows an understanding of economics. However,
>your 3rd reason is not quite correct. Rich people may have more debt
>than the less well off, but proportionally have much less debt. When a
>middle income family carries a mortgage, that is often a large and
>burdensome amount relative to income. The rich seldom feel the same
>pinch with their mortagages, unless, of course, they got themselves into
>a "house poor" situation, which is much more under their control. Now if
>that means the less well off benefit more from cutting the deficit than
>the rich--well, why not?
>
>Dick
>
>On Fri, 23 Jul 1999 11:03:27 -0400 "BruceB" <bruceb@xxxxxxxxxxxxx>
>writes:
>>Howard, the biggest issue here is what is the best thing to do with
>>the
>>surplus, and when you look at all the options, I think paying off the
>>national debt wins hands down for three reasons.
>>
>>First, the goal of any tax cut is to increase the disposable income of
>>the
>>tax payers. When you pay off debt, you lower interest rates. Lower
>>interest rates in turn result in lower auto and housing payments for
>>tax
>>payers, which increases their disposable income. I know this sounds
>>simple,
>>but even the WSJ (whose been ranting against paying down the debt)
>>doesn't
>>seem to understand.
>>
>>Second, although Japan has clearly proved a country can save too much
>>money,
>>it's safe to say that the US is nowhere near the danger point. The
>>best
>>thing that could happen with any money returned to tax payers would be
>>for
>>them to save it, because the economy is clearly not lacking in demand
>>right
>>now. Paying off the debt actually has a better chance of
>>accomplishing
>>this. Why? Because the debt is in the form of long term bonds. How
>>many
>>bondholders do you know take the proceeds from a called-in bond and go
>>out
>>and spend the money? Not too many, I bet. Rather, they take the
>>proceeds
>>and turn right around and put it into other investments (usually other
>>bonds). On the other hand, there are plenty of people who take
>>additional
>>tax refunds and immediately increase their levels of spending. This
>>is not
>>a perfect science, but the historical evidence does show that money
>>put back
>>into the economy through debt retirement, as opposed to tax
>>reductions, has
>>a greater likelihood of being saved.
>>
>>The third reason is the all important political factor. Every time
>>Republicans try to reduce tax rates they get beaten up for favoring
>>the
>>rich. The funny thing is, debt retirement will disproportionally help
>>the
>>rich just as much as a tax reduction would (richer people have bigger
>>auto
>>loans and mortgages, obviously). Despite this, liberals seem to be
>>very
>>supportive of the idea of paying off the debt, so why pick a fight
>>when you
>>don't have to?
>>
>>Bruce
>>
>>
>>----- Original Message -----
>>From: Howard Hopkins <hehohop@xxxxxxxxxxx>
>>To: <andrew@xxxxxxxxxxxxx>; <dickwebb711@xxxxxxxxx>;
>><realtraders@xxxxxxxxxxxx>
>>Sent: Friday, July 23, 1999 9:26 AM
>>Subject: Re: GEN: Y2K EXTREMISM?
>>
>>
>>> Didn't we hear this same debt arguement in the 92 elections??
>>>
>>> The absolute $ amount of national debt is irrelevant. The % debt
>>relative
>>> to GDP is what you need to control. Should you refinance your home
>>mortgage
>>> when interest rates are @ 30 year lows?? How about a second
>>mortgage?
>>>
>>> Supply side economics kicked off this whole boom in the Reagan era
>>and
>>> expanded the revenue side of the equation. Why won't that work now?
>>>
>>> And by the way... aren't stock prices near all time highs, bond
>>prices
>>near
>>> multi-decade lows, and the dollar the strongest currency in the
>>world?
>>This
>>> economic theory to pay down debt to improve the US economy has been
>>> invalidated in the real world... don't you agree?
>>>
>>
>>
>
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