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I don't agree that we can go back to "Clinton prosperity." I just agree that the tax increase would be a good trade for reduced spending, reduced regulation, and a strong dollar, even if a tax increase would offset some of the benefits from the other policy changes.

I'd hoped we could hold the line on taxes and reform some programs but voters didn't agree. Okay, fine.

If we're serious about fixing problems, we will raise taxes on most people and cut spending back by a bit. This will do a couple of things. First, there will be a short term GDP impact as the reduction in gov spending and consumption kicks in.

Next, it'll increase the value of the dollar in the short run as other currency buyers in other places have renewed confidence in the dollar as the world's reserve currency.

However, too much of an increase in the dollar would hit exports. That's not good in light of the first effect. So the Fed would no doubt crank the printing presses up even more to protect exports (because the Fed's dual duty is to manage inflation and try to reduce unemployment). I'd like to see a *stable* dollar with a slow rise in value. Shooting it up too far too fast would disrupt too much.

But back to the point. For God's sake, hopefully Congress comes to its senses with regards to reworking taxes to reward investment. That's the real reason companies are sitting on cash piles or just handing it back to investors.
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