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Name:
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water_watcher
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Subject:
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Economics Lesson
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Date:
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9/12/2008 2:34:18 PM
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This is in response to a post below.
Of recent the economy has slowed .... but until the democrats took over congress, it has been the longest economic expansion in the history of this country ... even longer than the last great Republic president Ronald Regan.
You are partly right on the feds ... they do lower interest rates to stimulate the economy ... but they also lower rates when inflation is in check. Both were happening ... we had an expanding economy with low inflation. The feds have stopped lowering rates, in fact the next move will be up, not down.
The other reason rates are moved down is to weaken the US dollar. That helps exports and makes imports more costly. While that helps US jobs, it also adds to inflation since we consume so much more than we can produce, it raises prices of imports.
Guess what we import a lot of OIL ... yes the weak US Dollar from lower interest rates drives up the price of oil and what you pay at the pump. That is why we need to drill more in the US and import less. What the republicans have been saying for some time.
Since interest rates have been stable and are projected to rise, the US dollar is getting stronger and oil has come down from $148 a barrel to $101 today. After the hurricane passes, assuming no bad damage, oil will settle in at $70 -$80 a barrel. Still too high, but until we approve more drilling or reduce consumption, that is probably as low as it is going.
And yes, the stronger dollar will make imports cheaper and probably hurt some US jobs ... so expect to hear the crying about that.
But that my friend is how the economy and economics works.
Next lesson will be why raising taxes would kill us as Obama proposes. Yes even if it is only on the top 5%. Those are who creates the jobs. Redistributing wealth (socialism) does not work. It will drive money over seas where it can not be taxed rather than invested in the USA.
Lower taxes on businesses is good because it allows businesses to be more competitive, create more jobs. It also lowers inflation because who pays for the business taxes ... you and I in the products we buy and then they are taxed again with sales taxes that we pay with after tax wages we earn.
That is three layers of tax in just that example. There are even worse situations. Yet Obama says tax businesses and the "rich" more so he can redistribute to people that do not even pay any taxes right now. But the NEED it. Yeah, that will really incent them to do better. USA is the land of opportunity for anyone, so lets take more away from those that achieve and give it to those that have not. That will be GREAT for the economy and really incent people to get ahead so it will be taken away from them.
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