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Coyote astutely points out:

There is legislation pending in Congress to restrict the ability of lenders (e.g. credit card issuers) from changing rates on existing debt. They ask if it is fair for someone who took on a debt thinking it would be at 15% to suddenly find it is at 25%. But how are tax increases any different. I make 10-20 year investments in my company, and the expected tax rate is a hugely important assumption in whether it makes any sense for me to put my capital in a particular venture. How is a large increase in taxes on returns from my past investments any different than changing the interest rate on an existing debt?

2 Responses to “Can You Have it Both Ways?”

  1. Harry says:

    Coyote poses a pertinent question.

    People who have their own money at risk think this way.

    I wonder who would be so brave, given our Sovereign’s willingness, along with his court, to repudiate debt and adjust the cost of doing business, to have such disregard for property rights and economic freedom, and to be so capricious in his every move.

    To me it is no wonder how the United States has become the envy of the world, despite its sacrifices and the socialist winds blowing against it.

    Right now, I’m not surprised when brave people don’t want to borrow money to buy a $750,000 injection molding machine. How can you predict your cost? It depends on whether Barney Frank, or Nancy Pelosi, or Secretary Geithner gets up on one side of the bed or the other next morning, and how happy they feel.

    The safe bet is that inflation will rise. That does not mean “Keep your money in a money market fund,” even if it is rated by Peter Rizzo. It does not even mean one should chase the herd of “smart” money.

    Best wishes to Wintercow, Speedmaster, Coyote, and the rest of the economic junkies.

  2. jb says:

    Well said Coyote and Harry. It also occurs to me that credit card holders had a contract they signed that specifically provided the lender the right to increase rates. Congress has now prohibited these voluntary agreements. If only the Congress would pass legislation stipulating no further changes in their “contract”…

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