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| *Loan,banking and credit>>>income tax |
Who here thinks that any of the following are high: mortgage rates, taxes, inflation, gasoline, GDP & income? |
Feel free to add any other financial factors that you think are high. I ask only one thing: please explain why you think they're high and, above all, give some historical perspective. That's a fancy way of saying: THEY'RE HIGH COMPARED TO WHAT OR WHEN? As opposed to: they're high 'cause I don't like the price. Or, they're high 'cause I can't afford 'em. That sort of thing. I'm not sure about mortgage rates (although home prices are high historically...they grew too fast and now we are seeing a correction to stabalize prices) as i don't really follow mortgage rates, but keep in mind that all my answers take inflation into account...a dollar just ain't worth what it used to be worth. you should add interest rates for bonds as well as the short term interest rates as market indicators/predictors. short term rates are controlled by the SEC in an effort to prevent recessions (negative GDP growth) and unsustainable positive GDP growth which leads to inflation. short term interest rates are high for recent years, but low historically. the lowest is actually 0%...this is used in dire circumstances such as the stock market crash of 1986...worse than the one that caused the great depression. thank you, allen greenspan. it has been around 20% in the past when GDP growth was too high like in the late 70's and early 80's. almost every single time, however, the fed has kept interest rates too high for too long leading to recession. this is due to the SEC mostly looking at past data as it becomes available rather than forward looking data. although taxes are low due to tax cuts (and they're lower for everyone who pays income taxes...the "tax cuts for the wealthy" is political spin), tax revenue is at historic highs. see, when people and businesses have their own money to invest, with the goal of investment being profit....people and businesses are making more money today which means the government is able to take more even though rates are relatively low. inflation is low today...yet Bernanke, the current SEC chairman, is stubborn to admit victory...it's even low by recent history as it was much higher in 2000. the fed overreacted then, raising rates to over 6%, which lead to the recession you always hear about bush inheriting when he took office. people blame clinton...but it's practically all on the overreaction of greenspan's SEC. i believe it's presently at less than 2% inflation and has been higher than 4.5% in the past 6 yrs...and MUCH higher in the 70's and 80's. gasoline price at the pump is the highest it's ever been. it is higher this summer than it was immediately after katrina which is the first time prices broke through the previous record during the 1970's US led oil embargoes...which hurt the US economy sending it into a recession. the fact that we are not in a recession at these prices is another testament to the strength of the economy today. nothing can stop the US consumer it seems. GDP is pretty average currently. It was as high as 4% in recent years which was worrisome because when the economy grows too fast, inflation rises to problematic rates. It's about 2% now which is very nice. the economy is not too hot for inflation to be a worry and not too cold that a recession is likely. as GDP is very strongly tied with short term interest rates which are controlled by the SEC, historically, GDP growth goes between -1% to about +5%. personal income is at historic highs. both mean and median income are higher than ever...meaning the average person earns more than ever and the middle class earns more than ever. you should also consider unemployment rates which are at 50 year lows. we have about 4% unemployment meaning 96% of the workforce is employed. all in all, the economy is amazing right now...though you rarely hear the media discuss it. i don't know if they just don't want any credit given to this administration (it's the only thing they seem to have gotten right it seems). they would have you believe we're in the crapper even though most numbers are better than they've been in decades if not better than ever in US history. it takes big events like Dow 13,000 and new daily record highs for most media to report on good economic indicators (it took years to get from 11-12, and it took just 6 months to go from 12 to 13...we've already gone over 13.5 k....we'll be over 14,000 sometime near the end of the year...and much higher if the fed does what investors are begging for and declares victory on inflation so they will lower the interest rates). |
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