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Politics : Formerly About Advanced Micro Devices
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To: Scumbria who wrote (112568)5/25/2000 3:58:00 AM
From: Petz  Read Replies (1) of 1576140
 
OT, Scumbria, I haven't commented on your AG lynchmob mentality yet.

Yes, I think the Fed has overdone it. The economy will slow, but I don't think growth will become negative. I think the slight pickup in inflation we are seeing right now was actually CAUSED by the Fed raising rates.

The best way to lower inflation is to increase production, lower trade barriers and reduce the size of government. That was proved by Reaganomics.

I like the idea of the Fed targeting money supply, rather than targeting inflation and unemployment. No one knows how low unemployment can go. The only thing problematic with money supply is measuring it and determining which "M" is most important. I can't believe the Fed can't calculate some kind of a weighted optimum definition of "M" which predicts inflation better than the unemployment rate. IMO, if the Fed had stuck with the Volcker regime, LT bond rates would be 4% now like they were in the 50's and 60's.

Japan has LT rates lower than that and very little inflation.

So I guess you can tell I'm not a big fan of AG either. But I don't believe you can blame him for the bear market. Actually, non-tech stocks were in a bear market for the last year and a half and are finally coming out of it. They went into a bear market even before AG started raising rates. Takeovers of old-economy stocks will accelerate since they are ridiculously cheap. And the tech stocks with earnings will come out of it shortly.

If AG had not complained about tech stock valuations, they may have gone a little higher than 5500 on Naz, but something else would have made the crash much worse. I'm glad AG jawboned the tech stocks down.

Petz
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