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Tax Guru-Ker$tetter Letter
Monday, July 29, 2002
Economic Cycles

Every economist has his/her own theories as to what causes the ups & downs of the economy. Often, they take events that happened and try to link them as cause & effect, when in fact they were just coincidences. For example, Clinton worshippers have continuously claimed that his huge tax increase in 1993 caused the good economy of the late 1990s. The truth is that the economy did well in spite of the tax increases, not because of them.

As Bruce Bartlett explains here, economists can't even agree on the effect of the current stock market gyrations.

I don't claim to have the ultimate economic formula, and I don't believe anyone else has it either. Such a predictor would enable its followers to become the wealthiest persons in the world. I am more inclined to believe the thesis of this study, which claims that luck is a big factor in how our economic cycles go. Despite their claims of omnipotence, our rulers in DC couldn't fine tune the economy, no matter what tricks they try.


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