Saturday, August 12, 2006

One God that didn't fail...

When Ronald Reagan became President of January 20, 1981, the hostages in Iran were released. The Ayatollah's folks apparently did not want to see what the Mad Gipper might decide to do about it.

But President Reagan has some greater feathers in his cap.

He was the central leader behind victory in the Cold War, a monumental human accomplishment.

He was also mocked for his belief in Supply-Side Economics.

Data published by The Wall Street Journal and generated by them, the Heritage Foundation and the OECD tell a remarkable tale, was published on Saturday 8/12/06 by the WSJ.

It was pretty elemental, as I understand it. Lower personal tax rates augmented by a stable monetary policy would yield faster economic growth without inflation.

It was a sad state of affairs. Mortgage rates were at 20%. The Dow Jones Industrial Average had been below 800.

Newsweek (the WSJ reports ) said RR "inherits the most dangerous economic crisis, since Franklin D. Roosevelt became President at the depth of the recession. (Which was only really ended by WWII.)

But the economy began a massive rolling boom, which has not ended yet.

Paul Volcker, Chairman of the Fed, held the lid down on monetary restraint --- with no badgering from RR.

In the U.S in 1980 the top "marginal" (the tax on the last dollar earned) was 70%. Today it is 35%. The Brits went from83% to 40%. Spain from 66% to 35%. South Korea from 89% to 40%. Ireland from 60% to 40% (becoming a startling boom state.)

In Old Europe many countries have gone to "flat taxes" were adopted at about 25% or lower --- down to 13% in Russia!

And what happened? Geo-political turmoil --- and an economic explosion.

The Dow Jones Industrial Average was below 800; now it is over 11,000. Mortgage rates are at about 5% to 6%.

More than 40 million jobs were "created."

At that rate the DJIA would be about 150,000 (!) in the 25 years to come. (But a trend that won't end --- does.)

Kudos to the Gipper, wherever he is.

Ben

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