Thursday, December 08, 2005

Tax Cuts

Despite Deficit, House Approves $56 Billion in Tax Cuts
Published: December 8, 2005

The article explains the situation sufficiently. The crux of the problem, though, exists in the Inflationary pressure behind the Tax Cuts. We are talking at the minimum of some $75 bn additional unfunded Federal spending, no one stupid enough to imagine legislators and Senators will actually allow final vote reduction of Spending.

This Author is not a devotee of Monetarism, in any sense of the term, but the obvious increase of unfunded Federal spending would seem to nullify the drag of 3% of the nominal Overnight rates. No wonder Fed members are talking about neutral Interest rates. lgl

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