An interesting quote above to be sure, and former Chairman Greenspan is absolutely correct. We are still expanding the Fed balance sheet. We are “tapering” but we are still pouring money into the global economic system. We don’t know what will happen exactly when the Fed goes neutral or starts to raise interest rates.
In the July 26, 2013 edition of the Bank Credit Analyst, editor Jim Grant notes that when Ben Bernanke was beginning the second round of “quantitative easing,” he described it in February 2011 Congressional testimony as equivalent to an interest rate cut. In recent Congressional testimony explaining what might be (or might not be) a forthcoming “taper” in “quantitative easing,” he suggested that it would not be equivalent to a rate hike.
The money’s going to keep on flowing for a good while, at least that’s what the Street thinks.
That’s probably bullish for stocks, it has been. So party on, at least that’s what they say on CNBC.
Here is what Business Week writer Brendan Greeley tells us about the effect of personal taxes on our economy: “Economists have known for a while that personal marginal tax rates, and in particular those on the rich, don’t seem to have much of an effect on the economy.”