Rebirth 79: I opened a bank in the United States

"You finally got to this, and I've been meaning to tell you about it for a long time. Apart from the time after the Economic Recovery Tax Act and the 'Star Wars' speech, companies in the defense sector were up , the defense sector has been down most of the time since you directed us to buy in Georgia."

"Keep faith! Powell, at the right time, you can increase your position! Now that the investment business has been transferred to a commercial bank, the restrictions are much smaller. I can still allocate 2000 million US dollars for your operation. Believe me, this is just before dawn. dark!"

"Well, I understand that you may be betting on the dividends of the national defense and military industry during the Republican administration, but... the current federal finances are not optimistic! Especially after the tax cut, although the market vitality has recovered, generally speaking, the unemployment rate has not Lower, but higher and higher!"

As a manager of the Black Flag Savings Investment Business Group, Powell is not as optimistic as Carter:
"As for the Fed's interest rate cut, it looks more like a temporary adjustment. Maybe it will rise again in less than two days? After all, the current inflation rate has not yet dropped to a reasonable range of 2%-5%."

"These are all temporary, and the reduction in tax rates will also be accompanied by an expansion of the tax base. Federal finances...haha, there is an idea at the root, but...you see, the increase in the defense budget is only a matter of time, and the federal fiscal revenue will also Rebound. I haven’t started to do it now, it’s just that the income is limited.”

Investing in the field of defense can be said to be something that a person with even a little basic understanding of the United States would do during the Republican administration.But the situation, as Powell said, continued to invest in the stocks of companies in the defense field, so far the rate of return can be described as poor, and the stock price has not seen any significant rise.
At first, Carter even wondered if he had miscalculated something, but now that Carter has matured a lot, he also wants to understand a lot.
First of all, the defense sector will definitely rise!

Just like the defense sector rose sharply after the general election in 80.In addition to Reagan, the Republican president, who came to power, there is actually a lesser-known message hidden in this federal government.That's the Republicans holding a majority in the Senate!

Carter forgot whether this was the first time in 25 years or what year the Republicans took the Senate, but that didn't affect the big picture.The president is a Republican, and in both houses of Congress, the Senate, which occupies the core position in the United States, is also a Republican
These two Republicans get together, and you say that defense stocks will not rise?Isn't this unreasonable? !

But in the follow-up, after Reagan came to power in 81, let alone the defense budget did not increase. The first thing this guy did when he came to power was to cut federal government spending.Although the knife has not fallen on the army's head for the time being, this is obviously not a good signal
After struggling for a period of time, the Ministry of National Defense or the military command has not seen any large-scale contract procurement bidding information, and investors have lost confidence in the defense sector.
Finally came a "Star Wars" project, people thought he was finally going to do it, and Carter thought so at the beginning.As a result, it seemed that there was a lot of thunder and little rain, but we still didn't see any actual money coming out, but the federal spending was still shrinking.
Almost all the departments that can be cut have been cut
This kind of repeated horizontal jumping has to make people feel drummed.Even Carter, if he hadn't had the foresight, probably would have doubted whether Reagan was a qualified Republican president.
There's Jimmy Carter. He can lose the Senate.
At least for the time being, the example of the "most failed" US president comes first, and how much trust the public has in Reagan remains open to question.
Who knows if he's also a "deviant" Republican? !

Powell was also scared after such five times of tossing
But with the deepening of learning, Carter is not too afraid.

"No what's that?"

"That is the curve of the relationship between tax rates and fiscal income proposed by an economics professor at the Graduate School of Southern California. They believe that a 100% tax rate will cause all production activities in the monetary economy to stop. All people's labor income will be lost. If the government expropriates, no one will be willing to work, and the social supply will be 0, so the fiscal revenue that can be brought to the federal government will also be 0.”

Powell frowned slightly:
"So, you are saying that the tax reduction in the Economic Recovery Tax Act is to stimulate production through tax reduction, thereby increasing social supply, and thereby expanding the tax base?"

Playing with the pen in his hand, Carter said slowly:
"Compared with the traditional way of stimulating demand and driving the economy, increasing supply to stimulate economic activities will take a little longer to take effect. The cultivation of the tax base will take time, but I believe that this is only temporary. In the current situation, it is necessary to ensure a tight currency With the policy unchanged, it is not easy to formulate a fiscal policy to stimulate demand, so it can only be done through the supply side. I believe they will succeed!"

"That's right, their school of thought is also called the supply school. They believe that the government can expand the supply, thereby expanding the tax base, and obtaining higher fiscal revenue. As far as I know, that Professor Arthur Laffer is currently our Fiscal advisor to the president."

"You haven't heard of the Laffer curve, have you?"

The supply school is not well known in this era.In other words, until the future, this is a non-mainstream school of economics.But for Carter, who has studied macroeconomics, especially political economics, he has always heard of the Laffer curve.

At first, Carter hadn't been able to connect this information in memory with the reality of what was happening now.Then, he would be a little flustered, but when Carter found out that Arthur Laffer was now Reagan's adviser, his heart was at ease.
Others do not believe that the supply school can revitalize the current US economy, but Carter believes it!Well, naturally.
"So, I left you alone just to tell you. Don't be afraid, and increase your position boldly! With Douglas developing steadily and making progress, even if the investment loses money, I, the Black Flag Commercial Bank, can still bear it! Behind you, there is the wealth of the entire Coffey County and Atkinson County supporting you, and this is your backing!"

"Are you really not afraid of losing money? You know, once something goes wrong, especially in terms of turnover, Goodman is likely to run out."

"It's okay, there is a reserve fund to support it! Don't worry about it, the high unemployment rate is a good thing for Douglas. Because it means that there is a large influx of people, and population is the foundation of a city's development! And Douglas' side is the foundation of our bank!"

"As long as there is no problem with Douglas, then everything will be fine! I trust my judgment, and I hope you can trust me!"