15 
holdings in good part by credit - and a boom will be set in motion 
just as in the case of a surge of optimistic expectations. In both 
cases there is a non sustaineable increase in asset prices. The 
mechanism ressembles that of the trade cycle where there is a non 
sustaineable increase in the rate of growth. Naturally the two - 
the financial cycle and the trade cycle influence one another. 
CAPITAL GAINS TAX. 
The opponents of the capital gains tax maintain that such a tax 
makes it more difficult to sell new shares especially if it is the 
case of a firm which does not belong to the small set of very well 
established large corporations. The idea is presumably that those 
who take up newly issued shares say of a new high tec concern will 
often have to base themselves not on actual returns which are 
still modest but on the promise of large returns in times to come. 
In other word the chances of new corporations are thought to be 
based on investors which are to some extent speculative.