RE: "Stock Market and the Real Economy"

["Lonnie K. Stevans" <acslks@xxxxxxxxxxxxxxxxx>]

>  Surely, the ability of entrepreneurs to raise copious quantities
>  of money is aided and abetted by the high stock market prices.
>  Also, the ability of new companies (dot.coms) to acquire old
>  companies (AOL-Times/Warner) is possible because of high,
>  and perhaps distorted, stock prices.

I think you answered your own question--the "copious quantities
of money" raised by entrepreneurs has perhaps been used to
purchase existing capital and other financial instruments.

>  And my friends and I are admitting to spending more freely because
>  our stocks held directly and indirectly make our net worth higher,
>  even if a temporary illusion.
>
>  How did someone look for that "empirical evidence"?
>
>         Mason Clark

I have no problem with unrealized capital gains possibly increasing
consumption (and savings).  However, empirically the effect on
consumption spending has been found to be negligible.

Lonnie K. Stevans
acslks@xxxxxxxxxxx