Was Clinton's Economic Record an Aberration?

[ramapo]

Could've a President Gore continued the successes of the Clinton years even with the unavoidable popping of the equity bubble?

Can a President Kerry have any hope of picking up the pieces or might he be doomed by the old saying, "Watch out what you wish for(being elected) because you might get it", if the current credit and housing bubbles pop early next year?

Politicians are quick to place blame or take credit for the state of the economy but it is often said that the economy is just too big to be steered by the impact of an administration's economic policy.

Clinton benefited from a perfect storm of somewhat higher tax rates, a hugh influx of capital gains, and millions of jobs with the resulting increase in funding to the government.

I believe the Clinton admin did implement some very responsible fiscal policies, moving away from the faith-based Republican policy of trickle-down economics (aka borrow and spend). This resulted in favorable moves by the bond market, freeing up investment dollars and fueling the '90s boom. But truthfully I wonder just how real the balanced budgets and fleeting surpluses were.

My friendly but typical-Repub coworker claims Bush is just the victim of Clinton's excesses and that Bush's policies have actually worked quite well in bringing the economy through the equity implosion/9-11 downturn with relatively small effect.

I contend that the Republicans have engaged in an irresponsible and inappropriate redistribution of what surplus there was, have returned to deficit spending with a vengence, and have fueled it all by printing money and taking a nation with a serious credit addiction to a nation with a hugh credit bubble, indebted to much of the world.

But once again to be truthful, the low interest rates have allowed continuation of consumer and business spending, without which we'd be in deep crap. And part of Clinton's success was due to lower interest rates.

However, I contend that the attack on the US that we should fear is an economic one. We cannot be touched militarily but are certainly vulnerable economically. We depend on the world for oil, for credit, and for manufacturing. But the world depends on us to be a good customer.

Common sense tells me that today's economic situation is not sustainable, that Bush's policies are rooted in fuzzy math and that the progress Clinton made towards imposing some amount of fiscal discipline has been destroyed and then some.

The Clinton economic record was remarkable but I think it needed to play out a few more years to truly be labelled a success.

[BOHICA06]

1. Gore would have had a mighty row to hoe ...

..the stock market was adjusting, the .com's pop, telecommunications bust, and being generally overvalued. So a recession was present and for at least 1 and maybe 2 quarters he could have done nothing.

If Richard Clarke couldn't stop 9/11 - he would have enormous upset in NY with airlines & tourism tanking. He's going to war somewhere - so defense costs would increase in face of lower tax revenues due to loss of capital gains (stock market again) and increasing unemployment.

It would be different, but some things would be beyond his control.

The Bush tax cut was only a drop in 2001 - the 300 per income-tax payer.

[tritsofme]

2. The 2001 recession was inevitable

I was saying in 2000 that we were headed for recession, but some people preferred to keep their heads in the sand, and thought that since we were in a "new economy" recessions did not have to happen any more. They ignored the business cycle to their detriment.

As to what scenario would have played out in a Gore administration, I think that he would have been able to use the surplus as a rainy day fund, and invest in our infastructure while giving tax breaks to middle and lower class folks that would actually spend it, instead of the uber-rich.

My personal belief is that 9-11 would have happened regardless of who was in the WH, but we would have had different reactions in different ways, and I think we would have come out of the 2001 recession with a relatively small cyclical budget deficit, but not one of in excess of $500 billion, if for no other reason than the Republican Congress wouldn't have allowed the prolific spending we have seen in the past 3.5 years if a Democrat was in office.

Divided government was great for the markets and the economy in the 1990s, and I think that's what we will be returning to in January.

[stevebreeze]

3. the recession was coming in 2000 with Gore or Bush

It is not likely that it would have been as harsh under Gore. Gore was far more likely to have implemented real economic stimulus. Infrastructure building, more road schools. Also extended unemployment bennies. More help to the states. Far Far smaller budget hole, the one likely to make the next recession damn hard.

[unblock]

4. bush's tax cut did MAJOR harm

first, it destroyed fiscal discipline, dramatically increasing interest rate and inflation/deflation/currency risk; in this uncertain market, planning became very hazardous and investment came to a halt as a consequence.

second, it placed the vast majority of funds into the supply side -- the rich people for whom extra cash doesn't increase their consumption (demand) but MAY increase their investment (supply). but since they had more idle funds that they weren't investing anyway (there was a supply glut) the superfluous tax cut just meant that they had even more idle funds. there still wasn't anything productive to do with the money.

third, the tax cuts were phased in. stupid, stupid, stupid. if i'm a rich person, and i know that taxes will be lower NEXT year and the THE FOLLOWING year, then, guess what, i'm gonna DELAY my profits until those years. in other words, i have a direct incentive NOT to earn big bucks THIS year. tax cuts should be fully enacted all at once. tax HIKES should be phased in. with HIKES, the reverse holds: if i know my rates will be higher NEXT year, i have a direct incentive to make as much money THIS year. and that's what incentives are all about.

obviously, gore would have nothing to do with any of this nonsense. if there had been a tax cut, it would have been a modest cut aimed at the middle class -- demand side.

the recession would still have happened, but it would have been brief, not nearly as severe, and jobs would have been forthcoming much more readily.

[EconGeek]

12. Bush's tax cut helped the poor, but he undid it thru monetary inflation.

This is just silly.

First-- it did not "destroy fiscal discipline". The federal government has never had fiscal discipline and has been spending more than it takes in for many decades. The monetary inflation rate under Clinton was %7-%8. Under Bush it has gone up to %10-%11. The last time we had levels this high was the vietnam war. And look, we're in a war again....

The irresponsibility of the spending under Bush far exceeds the size of the tax cut.

Second, it did no such thing. This is a losing proposition for democrats-- Bush was smart and cut us off at the pass. He cut the tax rate for the lowest earning people from %15 to %10. This was a tax cut for the poor, and as a result %11 of the population-- the poorest %11, who used to have to pay taxes no longer have to.

He got his tax cut for the rich (Which was pretty small) and the middle class (which was ok) by including a large tax cut for the poor. IT was smart of him... and you only shoot yourself in the foot if you repeat the fallacious mantra that it only benefited the rich.

Third, this makes no sense-- if you understand the time value of money, you realize that the big profits THIS year are far more valuable than to have them next year, especially when you're going to save less than 1/3 of one percent in taxes by waiting-- you'll make more in interest on a money market account than you would save in taxes!


Tax cuts do stimulate the economy. They create jobs. (What do you think rich people do with their money? They invest it in their own business or in orther businesses and that capital goes to fund expansion, and expansion means more jobs.)

The problem is, Bush has been so irresponsible, that he has printed far more money than the tax cut would account for--- so the stimulus impact of the tax cut has been more than counter acted by the monetary inflation we've been seeing.

Monetary inflation, by the way, is really a hidden tax. The value of your dollars go down as you inflate the currency, taking money equally from everyone and reallocating it to the government. Which causes prices to go up eventually (The inflation regular people see, and then wonder why the fed claims inflation is %2, even though *their* grocery bill is up %10-%15.) and really undermines the growth in the economy.

[rfkrocks]

14. the great GOP lie

what do rich people do with their money-they invest-yes in all sort of cheap labor companies which do not employ Americans-yes the tax is directly funding the low paying jobs of the "Bush Economy" - which is why the labor statistics are BULLSHIT-which is why the CHIMP wanted to classify fast food jobs as manufacturing jobs-why do that unless he wanted to lie-and fudge the statistics like his Enron buddy-(it was Lay's plane that flew Bush around while stealing the election) the truth is the NOBILITY of this country believe workers should be satisfied with no benefits and low pay-like Springsteen said "we made you rich enough to forget our names" But I have a word of warning to you my GOP friend-remember that economic injustice brings social instability and along with it comes it bastard son-we don't want a French revolution in this country which is why we seek economic justice and that W seeks to suck from us

[papau]

17. Afraid your statement is not true.

You said "He got his tax cut for the rich (Which was pretty small) and the middle class (which was ok) by including a large tax cut for the poor. IT was smart of him... and you only shoot yourself in the foot if you repeat the fallacious mantra that it only benefited the rich." and that is just not true.

Given how at odds with the actual data the above is, it is pointless to discuss.

But an interesting post!

:-)

[EconGeek]

18. Not at odds at all...

Its not at odds with the actual data at all... its a statement of fact.

This year, %11 of the US population is not paying taxes for the first time. These people paid taxes in the past, but the tax cut was so dramatic that %11 of the population no longer have to pay.

I've heard a lot of repetitions of hte "tax cuts for the rich" phrase, but nobody actually runs the numbers, and the reality is these tax cuts were for the poor.

The lowest bracket went from %15 to %10-- a %33 cut in the rate. The highest bracket went from %35 to %33 (I believe), a %6 cut in the rate.

Clearly the poor have benefited more.

Those are the facts. Democrats will be more successful when they hit George Bush on the things he's really done wrong (and there are a lot of them!)

Such as the monetary inflation I mentioned, which has hurt the poor as well as everybody else, but the poor feel it more intensely.

[ferg]

19. Republican tax lies: income tax vs "tax"

11% of the US population is not paying taxes for the first time

That statement happens to be a lie.

That "11%" is still paying payroll taxes and sales taxes. So it is simply a lie that they are "not paying taxes."

The lowest bracket went from %15 to %10-- a %33 cut in the rate. The highest bracket went from %35 to %33 (I believe), a %6 cut in the rate.

Clearly the poor have benefited more.

This one isn't exactly a lie, but it's grossly deceptive. First, because these are marginal rates, the rich receive every penny of the 15% to 10% cut, as well as the 28% to 25% cut and the 39.6% to 35% cut.

Second, it completely ignores the cuts in the capital gains taxes, the distribution taxes and the inheritance taxes, which primarily benefit the rich.

[rfkrocks]

21. Don't forget the SUV deduction

at a time when American soldiers die for oil companies (Halliburton 1 billion dollar IRAQ no bid contract-funny how whitewater was investigated but blatant Tammy Hall like GOP corruption goes untouched-thats what happens when the GOP controls the country)-Shrub loves the SUV-failure to conserve is gluttony and that is a deadly sin that is not being paid by Dick "the deferments" Cheney or the Texas Souffle but by ordinary Americans-dying for the great Ayn Randian ideologues of this rapidly becoming bankrupt country

[Libs Bite Back]

24. the right wing spin machine loves tax talk

Absolutely correct. There is a lot more to this picture than just income taxes.

Taxes are so complicated that right wing spin can really go to town with their attempts to mislead. All presidents take credit for a good economy and blame a bad one on policies of their predecessor (of the other party). WE have to try to find some simple ways to explain the tactics being employed by the right to both enrich themselves and mislead the public as to what they are up to. I have an attempt on my site http://www.liberalsbiteback.com entitled "A beginners guide to how the rich right is trying to become permanently mega-rich and the rest of us permanently screwed".

[rapier]

5. notes

I'll address this in two parts.

The good looking overall economic performance of the late 90's was the final flowering of a two decades or more long in the making shift from the historic view of growth and profit away from traditional Adam Smith type which involved real investment and real cash return on it to the modern Wall Street paradigm in which virtually all 'investment' and profit is financial. Meaning the on paper. The almost exponential growth in debt, and modern accountings ability to make profit from the trading of debt in all its myriad modern forms resulted in an explosion in the inflation of financial assets. The vast 'wealth' createtd by the dotcom bubble and stocks and financial assets in general did trikle down to the real economy and make the employment and budget situation appear good.

Still, we all know that average wages have fallen. (See Minimum Wage in the link below)
http://billmon.org/
We know that income and more importantly assets have skewed strongly to the top. The seemingly good economic performance of the Clinton years hides the fact that the record is one that represents a failure for the Democratic post Depression model.

2. Clinton played his part by embracing and making offical policy the Wall Street paradigm. "Globalization' and 'free markets' as defined by Wall Street and corporations were embraced. Glass Stegal was repealed.
Profligate monetary policy as practiced by Greenspan by answering every crisis by flooding the world with dollar liquidity and promising impicitly to all speculators (that's investors in nomral parlance) that the Fed would backstop all problems caused by excess begat more excess.

Perhaps without such an embrace of New Era financial economics Clinton would not have been elected. He was a "New Democrat' after all, a vital part of his election in 92. The nurturing of the globalizers and New Economy seers and Greenspans serial bailouts, was also probably the ONLY possible political path. You see there is NO policy or even theoretical alternative to the economic world as it is now. For the only alternative would be akin to the Great Depression as a great contraction would be inevitable if financial assets, which is really corporate assets, were allowd to deflate to the historic mean.

[ramapo]

11. A Paper Tiger economy?

I always enjoy and learn from your "notes".

If I read you correctly, today's economic world is based in large part upon paper, with a historically smaller percentage based on real assets.

Much of this "wealth" has come from the debt explosion. We are now hostage to this economic world based on debt because there is no other practical policy or palatable alternative.

So our political leaders have no choice but to continue the policies of past decades, with relatively small tweaks depending upon the party in power. These policies have worked to increase our overall standard of living even though the average individual worker now gets less for their days' work than 30 years ago (hence the two-income family has become a necessity).

Most pundits predict better or at least continued good times ahead with only the occasional bear or goldbug anticipating serious problems.

My bottom line question is how can our economic world continue indefinitely along the current trajectory?

Costs of housing, insurance, healthcare, and transportation continue to rise. A million dollars sure isn't what it used to be.

A million dollar house is nothing special. Being a millionaire is nice but that doesn't really make one rich. A car costs what a house cost 20 or 30 years ago. Healthcare premiums for a family cost more than what many people earned in a year 40 years ago. Yes much of this is relative because family incomes have risen. Thirty years ago, $50K a year was a very nice salary.

Inflation (though not too much at once please) is a requirement for our continued economic well-being. Deflation can no longer be tolerated, though prior to the Great Depression there were periods of deflation to balance out the periods of inflation.

Isn't there a tipping point?

Nobody likes to talk about limits but doesn't there have to be one here? Population growth cannot be limitless. Economic growth has been based on population growth, increased efficiencies, some tangible assets, and paper, lots of paper.

There's an interesting side discussion in this thread on economic modeling. Well how does the current scenario play out over 20, 50, or 100 years. No current model can predict this. Do we continue along hoping for continued but benign inflation? Does the average home cost rise to $2,000,000, the average car $200,000, while the average family income must rise to a couple/few hundred thousand a year to sustain itself?

It seems that the economy is like our global ecosystem. It is keeping us happy despite some serious underlying problems. We can affect it but no longer control it. The next century will be an interesting, though perhaps not pleasant, time.

[EconGeek]

13. Inflation is not necessary. DEflation is not evil.

For over a hundred years in america the average price of consumer goods went down. This was deflation. At the same time, the economy was booming.

I don't know why people think that inflation is necessary. Not even paper money is necessary. (And if we used metal money exclusivly, you couldn't have monetary inflation)

When you have an economy that is improving processes and growing, the costs of things should go down.

Over the last 20 years we've seen massive increases in productivity due to the invention, advancement and adoption of computers. In some areas, specifically computers, prices have gone down. But computers have impacted the whole economy-- releasing massive amounts of value growth at the same or lower costs.

But the economy has seen inflation durign that time-- and significant monetary inflation, depsite the massaged "%2 inflation" type numbers you get from the fed.

Why?

Because the voracious appetite of the government for value has swallowed up all the results of that productivity. The taxes, essentially, have been raised to take all of the results of those productivity gains and give them to the government.

And still the government is running a deficit? There's a real problem there. (And this problem transcends the president, it occured under Carter when the computer boom was not yet having an impact, under reagan when it was in full force, under clinton when it was in hypergrowth, and still under bush where he's spending so much on warmongering that the still large computer industry doesn't have much of an effect.)

[rapier]

23. notes

"For over a hundred years in America the average price of consumer goods went down"

Which hundred years was that? I recall no 100 year boom nor 100 years of lower prices. I'll grant that price inflation from 1840 to 1940 was not usually all that great but I think the 'consumer goods" thing is a sort of dodge. Most 'consumer goods' in 1940 didn't exist in 1840.

Deflation in our credit based economy is death. Your looking I think at simple price deflation based upon productivity etc. etc. etc. There is a more insidious form of deflation. The deflation in the price of assets. Financial and real estate mainly. If those assets deflate then pension funds go bust, as they are doing now. Household assets would crater if stocks and homes deflated. A negative wealth effect that would devastate the real economy. There is no way in the world our economy could operate if stock and real estate assets 'deflated' to their historic mean
.
Why? Because it would cause a tidal wave of default on debt. In 1995 household debt was $4.6 trillion and household assets were $1.9 trillion. Currently household debt is $9.1 trillion on $2.1 trillion of assets. The debt to asset ratio going from 242% to 452%.

Deflation means much more than your simple price of goods deflation. The Great Depression was firstly the great Deflation of financial assets.

The Federal Governments share of GDP is as low as it has been in 40 years. Besides, the 'government' just doesn't take money and bury it. The money doesn't disappear. While this is obvious your description of government implies it.

[Vulture]

6. Interesting anecdote

I do a lot of work in the securities industry, and most of my family is in the securities industry.

One of my relatives worked at a company that among its specialties were strategic securities models i.e. stock market forecasting models that are capable of rough predictions even a decade or two out. I'll skip the details of the "how" and "why" it works (I also do R&D on these, though more tactical and hybrid models) though that is a fascinating topic in itself, since almost none of the data used in such models is related to finance or the stock market.

Anyway, I got to take a peek at the latest greatest long-term model from this relative's company in the late 1980s (later acquired by one of the big securities firms). While I didn't take it too seriously at the time, it predicted both the timing and magnitude of the stock market bubble that happened in the late 1990s. It also predicted a strong recovery this year as I recall, if anyone cares (2005 is really pushing the scope of its predictive usefulness, that model was generated many years ago).

This has led me to doubt that politics has anything to do with whether the economy is good or bad, because politics is a non-factor in the equations and in fact one could make a strong case that the factors used in the models are important determiners of political outcomes i.e. the causality is actually reversed from how many people think of it. The fact that good long-term models have remarkable predictive accuracy so many years out strongly suggests that politics is a sideshow in the economic scene. Specific policies may modulate the magnitude of certain functions, but they don't modify the basic shape. Given this, I find it specious to assert that there was a "Clinton Boom" or a "Clinton Recession" or a "Bush Recession" or a "Bush Recovery". These were going to happen no matter who was running the country.

Interesting food for thought.

[idlisambar]

7. From a skeptic, could you give details?

I don't doubt your broader point regarding economic trends acting independently of who is in office. This is particularly so since there has been a lot of continuity in the economic policies of Reagan, Bush I, and Clinton particularly with respect to their attitude toward Finance (not to mention Volcker and Greenspan). Nevertheless, I am deeply skeptical of predictive models with respect to the stock market, so I have some questions...

What kinds of parameters are used as a basis for these models?

When you say that the models have remarkable predictive accuracy can you give details on the predictions -- with some numbers?

Do these models predict trends in the broader economy (employment, economic growth, distribution of wealth, trade balance) or are they focused on the stock market?

Finally, was this the model produced by this company or was it just the one that turned out the best?

[Vulture]

8. A short summary

The models are primarily built from a very broad and diverse range of demographic data, not from financial numbers or stock market data (except to provide anchor values). This makes sense when you consider that people ARE the economy, and that their macro behaviors will be determined by demographics. One can very much view the stock market and economy at large as a consequence of shifts in people patterns in many dimensions. Part of the reason that this works over long timeframes is that people patterns change slowly, and so the effective 'sample rate' for prediction is low and errors accumulate much more slowly than they would in, say, a short-term trading predictor. This also tells you next to nothing about the long-term fortunes of a particular company, only the economy at large. The part that makes it different than how most people envision is that the algorithms that are used to roll forward the model into the future are not formulated by some ivory tower type somewhere but actually generated by induction from the data itself, using an extremely costly meta-algorithm which gives it predictive capability that comes close to what is theoretically possible per mathematics. Over time, you do get some model drift, both in phase and magnitude, just from the inherent noise in the system that accumulates over time. This is generally dealt with by "checkpointing", where it is in effect sampled against reality to see if the drift is within certain tolerances across a great many dimensions. If it drifts too much, they have to build a new model because its predictivity has decayed. Building models is expensive and painful, so they avoid it when they can.

When I saw the model in the late 1980s, that was THE model that the company had just produced. Realize that generating the model required a month or two of supercomputing time back then (definitely not cheap), so the results and the actual predictive efficiency of the model were closely guarded secrets that offered a fair amount of competitive advantage. The only serious drift from the model that I recall was that the market crash came 6-12 months earlier than predicted. In fact, everything has been slightly compressed from the timeline I remember. If that model was to be believed, the US markets should have strong and steady but otherwise uninteresting growth from about 2005-2010, though that has been shifted a bit forward by a year or so. After which, the economy stagnates, but I actually think that the timeline starts to fall outside its useful predictive range. I don't know the details of current models, just what people tell me.

The value is that it lets you predict what are good macro positions to be in as an investment company, and helps you beat broad market shifts for superior returns. Those folks are looking for every way to squeeze a few more percentage points out of their net return.

Important political points:

I stated with much confidence in 2002, much to the ridicule of many, that the economy would start to take off in 2003 and be very strong in 2004, and that for this reason it wasn't as much of an election issue as it seemed to be in 2002 when the economy sucked. My assertion was based on my knowledge that recent long-term models clearly predicted this. When I was informed by friends in the business that just about every single model, old and new, checkpointed successfully at the beginning of 2003, I knew that the recession was over. And the economy has played out pretty close to what was predicted.

The compression of the economic time cycles has definitely helped Bush, as it places the last year of his presidency in a clear economic upswing. And whoever is in office after November would have to try pretty hard to squash it.

I would love to work on a detailed long-term model, but I would have to find someone willing to pay for one first, and the business is in tactical and mid-range (e.g. 12 month) models. It is a complex business, and the odd compression that continues to show up in models has some people vaguely worried re: long-term model viability. (In some circles, they would say that this is the first measurable sign of an economic singularity -- they could be right.)

[mikemayberry]

9. economy could still be a huge issue

though i don't know if kerry is the perfect person to be the critic, i am not familiar with his record exactly. but i think the economy, and more specifically the federal budget and tax restructuring should be a huge issue in this election. what bush has done, which makes sense for keynesian economists, is to cut taxes and deficit spend in order to stimulate the economy. the other element of this idea is that when things get better, right about now if you are correct about the economy being strong, taxes increase to make up the short term deficits that have built up and federal spending is cut. bush seems to have no interest in the second part of this, along with everyone else it seems since we are still paying interest on debt built in the 70's to the tune of something like $300b a year. to me this is a fact i don't think a lot of people realize. if kerry would run with this and hit bush hard for wanting to make tax cuts permanent and extend deficit spending indefinitely, i think it would damage bush in the eyes of a lot of moderates.

this is just something i have thought of from reading online, if i am way off feel free to tell me.

[idlisambar]

10. sounds interesting...

...but I still find it almost inconceivable that a model could be accurate over such a large time frame. In particular, the standard interpretation of the late 90's speculative bubble is that it was a .Com-biotech driven mania. If this model was constructed in the late 80's how could it possibly have "been aware" of the internet and the frenzy it would generate? Or is it that the conditions were ripe for a speculative frenzy of some sort and the internet and biotech should be viewed as placeholders?

What, in your view, is the right interpretation?

[papau]

15. No way in hell - but a cute story!

The predictive models that do exist are indeed closely guarded secrets

But they do not use the inputs you suggest, nor give the outputs that you relate!

The Bond market projections and the stock volatility projections are some of the best work done in this area - as are the options work done at various locations in New York City.

In any case - I enjoyed your story - thanks for the smile!

:-)

[Vulture]

20. It is a bit more than just a story

I didn't mention what was actually used for the inputs nor what the outputs actually were with any specificity. I think you are thinking of different kinds of models than what I was talking about.

A lot of the long-term economic models are done in San Diego, not New York (at least in my experience). Silicon Valley is where I work currently, with hedge funds, primarily focused on very complicated hybrid systems that work in both stocks and derivatives across tactical and mid-term windows.

Tractable universal induction models are my specialty, and there is not insignificant interest in these in the financial modeling community as these are provably superior to all other methods (mathematically optimal in fact). Of course, they are also extremely difficult to implement and the theory comes from a different area of mathematics (algorithmic information theory) than most people who do financial modeling systems. In fact, no successful implementation has ever been publicly described, though it is an open secret that a few functional implementations exist. I was one of the people who developed that area of mathematics, originally with a focus on theoretical computer science in my case, so my familiarity isn't coincidental. I was involved in finance long before I got into modeling; two areas I worked in just happened to intersect very nicely.

/me shrugs

I don't do long-term capital models, but I have seen very good ones and they are definitely possible theoretically even if no one had ever built them. They were the first types of models to use a crude form of general induction and so it isn't terribly surprising that they have high fidelity over long periods.

Hey, if you don't believe me, I'm okay with that. I'm not selling anything here. :-)

[MichiganVote]

22. So then....

Alright, first off I am not a numbers/money head, so bear with me.

I have a question.If the people, places and things idea do not appear to unduly influence the movement of money (Sorry, give me someone to do a psychological on and I'll have a crackerjack model for you in no time)anyway if the movement of money is not dep. on the people, places and things idea does

1. Money or currency have a life of its own
2. What are the corrosive aspects of the world that damage its fluidity
3. Has there ever been a time when it has been strongly stopped

I'm very curious about your ideas

[papau]

16. "low interest rates" is always relative to the economic status of the

moment. Clinton had rather high absolute value interest rates, but they were low relative to the growth we were experiencing.

And for a reason. Everyones projection systems were projecting calm long term interest rates because of a deficit that was going away.

We also had no oil shock or a Greenspan that tried to set up the next election via slowing growth - at least we did not have the latter until 2000.