From: Robin Hanson (rhanson@gmu.edu)
Date: Thu Dec 30 1999 - 08:06:23 MST
Robert Bradbury wrote:
>Robin, I tend to agree with the problem of hyperinflated stock prices
>but am wondering about two things:
> (a) how much of this is due to the fact that the baby boomers are in
> their pre-retirement "saving" years and you have all those IRAs
> and 401Ks and that money *has* to go someplace?
This theory needs to be combined with some theory about ignorance
of all the other ways to invest money: foreign stock, real estate,
small businesses, education loans, etc. US stock dividends are
only 3% of US total income, and probably <1% of World income.
So there are lots of other income streams available to invest in.
> (b) If the Fed thinks there is a bubble (in the stock market) and
> wants to take it down slowly, would one way to do this be to
> ratchet down the allowed stock margins?
I really don't think that would have much of an impact, and I not
much a fan of regulatory meddling; the issue is investor perceptions.
Robin Hanson rhanson@gmu.edu http://hanson.gmu.edu
Asst. Prof. Economics, George Mason University
MSN 1D3, Carow Hall, Fairfax VA 22030
703-993-2326 FAX: 703-993-2323
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