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Economic Growth - Oil Prices

 
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PostPosted: Thu Nov 27, 2014 7:29 am    Post subject: Economic Growth - Oil Prices Reply with quote

PeakTrader:

The Reagan tax cuts generated strong GDP growth, while reducing government tax revenue.

Of course, if tax rates went to zero, government wouldn’t collect tax revenue.

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I agree, there was a huge increase in defense spending and some cuts in other spending.

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What’s your point?

You don’t want foreign investment in the U.S.?

You don’t want the U.S. to consume more than produce in the global economy and in the long-run?

You don’t want the U.S. to shift limited resources quickly from old industries into new industries?

What about the U.S. investment surplus?

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You should be concerned about adding $5 trillion of federal debt for a deep depression over the past few years.

There was a mild recession in 2001, thanks to the Greenspan Fed and the Bush Administration, and the 1982-00 economic boom was extended when the structural bull market ended in 2000.

If Congress tightened mortgage lending standards, rather than easing them, when the Fed began tightening the money supply in 2004, the financial crisis and severe recession may have been averted.

It should be noted, the U.S. had a steeper rise in living standards in the mid-2000s, because the U.S. was at full employment and consumed about $800 billion more a year than it produced in the global economy.

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Is it your position strong disinflationary growth was entirely caused by the Fed?

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I’ve cited some of the factors that facilitated growth under Reagan and Clinton.

It should be noted, income inequality increased and the recovery has been weak with the QEs in recent years.

So, there are other important factors that can generate growth.

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When Clinton raised taxes, the recovery was well underway, which is the best time to raise taxes (Reagan also raised taxes in a strong expansion).

Moreover, in 1995-00, the 80 million Baby-Boomers reached their peak productive years, oil fell to $10 a barrel, and we had a “peace dividend” after winning the Cold War.

I’ve explained it to you before.

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The Bush expansion began in 1991.

And, the expansion accelerated, in spite of the Clinton tax hikes.

It was inevitable, in part, for reasons I stated above.

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The unemployment rate is a lagging indicator.

The 1990-91 recession was milder than the 1981-82 and 2007-09 recessions.

So, a milder recovery is expected, to move towards full employment.

Chart:

http://www.multpl.com/us-real-gdp-growth-rate

Real GDP growth accelerated in 1992:

http://www.multpl.com/us-real-gdp-growth-rate/table/by-quarter

So, “what you’re saying is incorrect,” except what you said that agreed with what I said.

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Perhaps, slowing global growth, including recession in Japan, and slowing growth in the E.U., Russia, and China, had some influence lowering oil prices.

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Lower oil prices will boost world economic growth and higher world economic growth will boost oil prices.

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