I disagree with you..
I dont think M3 caused a bubble in the market last year. I think you can have a larger monetary supply, an easing so to speak without having a bubble. I still believe it was a combination of greed, advertising and lack of knowledge that caused both the run and the drop in the market.
If your theory is correct, show me where your theory alone bore fruit in past tense and if you feel it did 2 yrs ago why are we in the situation we are in now? Remember that 2 yrs ago we were in the middle of the Asian crisis, the Fed had to act, and they screwed that up too..damn lucky we didnt crash more than we did. The fed is never ahead of the curve..ever.. The asian crisis was caused largely in part to a large default in their banking system, not caused by loose money supply, but by horrible margin allowances. If the same policy of being able to leverage was in place here as it was there then you can talk all you want, but in fact our margin policies have TIGHTENED since 2 yrs ago. We have proper checks and balances in the market to avoid the collapse that occured in Asia, and that is why even though their marginal rates are lower there than here they still cant get it going.
You give way too much power to the Fed. I hate how they have so much power without any regulation..its a joke!
M3 is a good measure for some uses, but you have to look at way more than M3 to get a better picture of the economy. In fact M3 is used in conjunction WITH other measures, not alone when discussing the economic enviroment.
M3 did not cause the internet bubble, nor will it eliminate other bubbles that are in the market and will be in future markets. Greed causes bubbles..
I hope the Fed isnt following your wisdom, or we are going to be in for more of this same crap for another 18 months or more. Prices have gone up, even if you include all items of volitility into the CPI/PPI I dont think that overall prices have risen that much..energy and real estate are the only things that seem to have gone up greater than the rate of growth/earnings. |
