"The single most significant, inter-galactic, extra-celestial, interplanetary, and spiritual force behind the global stock market rally is the decline of inflation to rates not seen in over thirty years. While many industrial nations, including the U.S., have imposed anti-growth and anti-saving tax increases in recent years, fiscal drag has been offset by a steady decline of inflation. Inflation is a tax on money, wealth creation, income, and work effort. Inflation is a devastating tax on savings. But low inflation is a tax cut. By enhancing the value of financial assets, price stability rewards patient savers and investors. It is a stimulant to capital formation, new business start-ups and growth. Growth does not cause inflation, low inflation causes growth."
The above passage was written in 1996, right in the middle of Bill Clinton's economically successful presidency. Looked at in isolation, and with 1996 very much in mind, many would understandably conclude that the person behind the words was a Democrat promoting the virtues of the Clinton economy. But as readers can perhaps guess based on this column's title, the writer was Larry Kudlow, a prominent and very public Republican.
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