The Economy seems a bit foozy when the January evaluation of the Leading Indicators is made. The big Movers were a drop in Unemployment Claims and growth in the Money Supply, without which there was not much gain except to make up for the poor December numbers. It appears that the Economy lacks a clear directional course, with concurrent increase in the Money Supply; another way of saying We are building Inflationary pressure.
Interest rate hikes will do no one any good, and many significant injury. It will not even curb Inflation, if increase in the Money Supply without equal growth in the Economy continues. Financial funds are always allocated, even if to the disadvantage of the Economy. The Fed should be very careful about setting Interest rates; now is a time for Tax hikes, though no Economist would agree. The best Tax hike would be announcement that the Bush Tax Cuts are going to expire according to current Schedule, rather than made permanent. It delays actual collection of Tax revenues in the immediate future, promoting the Economy, but initiates expansion of Private Service and Operating Capital funds. There is a Time to Live, and a Time to Die; I think the Bush Tax Cuts have served whatever purpose they ever served. lgl
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