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The deal cut by President Obama and Republicans is being hailed by the talking heads on CNBC this morning as a stimulus for the economy. Really? I suppose it is stimulus in the sense that it is better than raising taxes, but this package should not be mistaken for good economic policy. Hereâ??s the main points:
The stock market is up today and many are crediting this compromise but I find that hard to swallow. There is nothing here that was not expected except for maybe the estate tax bit and that has little or no stimulative effect. And if the market is up because of these tax changes, why is gold up?
If this were a major positive change in economic policy we would see the flow of capital into gold start to reverse. So far that hasnâ??t happened, although to be fair, it is early. This deal is a minor positive for the economy - if you ignore the fact that it gets us even deeper in debt - but I donâ??t think this is the change weâ??ve been waiting for.
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