From: jfh@rpp386.lonestar.org (John F. Haugh II)
Newsgroups: tx.politics
Subject: Re: Clinton Policies (was: Re: Legalized Theft)
Date: 9 Sep 92 13:13:37 GMT
Reply-To: jfh@rpp386.cactus.org (John F. Haugh II)
Distribution: usa
Organization: River Parishes Programming, Austin, Republic of Texas

In article <1992Sep8.141601.17374@news.eng.convex.com> patrick@convex.COM (Patrick F. McGehearty) writes:
>You still have this wrong.  The economy was booming in 1968 (primed by
>the deficit spending).  The stock market continued to boom until 1969, a
>long time after the election.  LBJ lost it totally on the war issue.  Now I
>will agree that the runaway inflation leading up to Nixon's price controls
>was initiated by the deficit spending of the era (peanuts compared to
>the Reagan-Bush budget proposals).

No, I have this completely correct -

	"When inflation began to speed up in 1966 or 1967, it proved
	 harder than LBJ or his economists had expected to turn policy
	 towards restraint ...

	"So war, inflation, and the long-delayed tax hike [ the one
	 his advisors had urged, but which he ignored -jfh ] sealed
	 the doom of LBJ and the Democrats ...

	"Thus, as unemployment was the Number One problem faced by
	 John F. Kennedy when he reached the White House in 1961, so
	 INFLATION [ emphasis added -jfh ] was the nation's primary
	 problem when Richard M. Nixon took office in 1969. ..."
		-- Economics in Plain English, Leonard Silk

First, about the tax hike.  The tax cuts of Kennedy's presidency created
jobs, wealth, etc.  It also stimulated the economy, which grew, and that
fueled inflation.  The solution to an over stimulated economy is either
fiscal strangulation (tax hikes) or monetary strangulation (interest rate
hikes or restrictions on credit availability).  Had Johnson done either
in 1966, when he was advised to, the economy would have slowed down, and
the growth that Kennedy's tax cuts produced would have been moderated and
lasted into the 70's.  Instead, Johnson delayed his actions and gave us
the inflation that would lead directly to Nixon's imposition of wage and
price controls several years later.

Second, about the booming economy and rising stock market.  If you throw
inflation at the stock market, it wants to rise.  As the value of the
dollar declines, the value, expressed in current valued goods and services,
of production increases.  Stock values are closely tied to earnings, and
devaluation-inflated earnings will cause stocks to rise in "value".  That
is, if my new car costs $20K instead of $15K, the company sees increased
revenues.  Even if their costs increase dollar for dollar, the constant
margin will insure that per share earnings increase at the same percentage
as the inflation rate.  Rising inflation, rising stock market [ and for
the technical-turds out there, this is a gross oversimplication, but given
the 14% year-over-year rate of growth in equities, it holds quite true ]

>It is time for a constitutional admendment for a balanced budget.
>Both parties have shown no ability to control the deficit, and they
>have had plenty of time.

Yes.  If all those states whose governments have had a balanced budget
amendment are wrong, I want to know why no one is screaming for those
states to repeal THEIR balanced budget amendments.
-- 
John F. Haugh II                   | "The US Government has the Midas Muffler
Ma Bell: (512) 251-2151            |  touch: everything they touch turns to
UUCP: ...!cs.utexas.edu!rpp386!jfh |  shit."
Domain: jfh@rpp386.cactus.org      |                  -- Jay Maynard