Should the feds cut interest rates this week?

Hmmm.. This is a tough one because I think a Fed cut could go either way. A fed cut next week could put people into jobs by Christmas which, IMO, would do more in the long run than consumer spending for Christmas. I think people aren't spending right now because they either don't have jobs or are worried about losing the one they have.

Do you think an income tax cut would have any real effect right now? It isn't like people would see any change in their paychecks. We're at the end of the year. I've got 3 paydays until Christmas. An income tax isn't going to kick in until next year when the withholding starts all over again.

I dunno.. I wish I knew more about economics...

fishin, When people spend money, it gets circulated many times over. That's the reason why a tax cut would benefit our economy. When our government spends money, it doesn't "create" anything for consumers to sell or buy. It only adds to our inflation. When somebody purchases some goods in a store, the clerk gets paid, the factory gets paid, the trucker gets paid, and they go around and respend that money in the open market place. Every $10 spent beomes respent over and over again. That's the reason why a tax cut will help our economy. c.i.

Sorry fishin, but economist are a lot like psychologists. They make great observers, and are really, really good at explaining what went wrong with their last predictions, but making those predictions are really not their forte.

Did you see what they did to MACRS depreciation, c.i.? Assets put into service since September 11, 02, get 30% bonus depreciation in the first year, then tack on the normal 1st year depreciation, yielding something like 44% depreciation expense the first year for assets with a five year class life. I thought that was a great idea, just because of the motivation it furnished to business. If it helped, I hate to think of what the economy would have been like without it.

Even if it may have failed, I still prefer a tax plan that gives rewards for future useful actions, rather than past actions. Yet, I've always been skeptical of following a failed plan with more of the same.

In other words, I leave your question right where I found it. This just isn't my night for good answers.

Oh! I understand all of that c.i.! No problem there. I just don't see where a tax cut is going to have any immediate effect between now and the end of the year. Even with another $600 "rebate" plan the checks aren't going to arrive until Feb. at the earliest. In the long term I'd agree although I don't think the Federal level is really where the tax cuts are needed. In my case the state/local level taxes are the bigger burden and where there is a lot more waste.

Result of Interest Rate Cuts?
The interest rate has been cut and nothing dramatic has nor will it take place. Americans want a secure future. With the present administration and the daily thought of war and terrorism, Americans are not ready for a robust stock market with a BULL temperment.

fishin, Sorry for this late response, but I've been ignoring the Finance Forum, because I didn't think anybody on A2K cared about this subject. As we all know, it's too late for the government to make any tax cuts for this year. They should have been working on cutting taxes effective January 1, 2003. c.i.

New Haven, There are just too many uncertainties in addition to the war on terrorism and Iraq. Most people with money are buying homes instead of investing in the market, because they feel that's the best investment right now. Buying a home, they feel, won't end up losing 30 percent of their value in one year. Their confidence in the market is pretty much destroyed by the Dot-Coms, Enron, WorldCom, Tyco, Arthur Andersen, United Airlines, Conseco Insurance, and many others. Not only that, but the stock prices are still about 20 percent above their real values, and many are not making any profit. On the other side of the coin, people are still investing in their 401k's, and that hoard of cash is ready to jump into the market when the institutionals see the market stabilizing. Prices will shoot up about 8 to 15 percent during the buy binge, but will settle back into reality to reflect the p/e ratios. At that point, we can expect to see the market gains (the S&P 500) of about 5 percent a year until inflation kicks in to a higher rate than we have experienced during the past decade. The feds will be kicking up the interest rate before it does too much damage to our economy. c.i.