Bob Brinker: Market Savant & Radio Host Message Board

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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host

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To: Alan Bell who wrote (4822)	5/3/1998 11:07:00 PM
From: stock bull	of 42834

Allen, I will take a stab at answering your questions. However, I'm no expert in this area, and I did not hear Bob's show this weekend. Having said this, here's my best guess: <<Why is the monetary growth currently so high?>> I think this is tied into asset inflation. For example, if stock are trading above reasonable norms, the excess value of these stocks contributes to the monetary growth. That is, investors who own the stocks can sell and convert the asset into cash. <<How would a high monetary growth cause inflation?>> Given my previous comment, the cash, if spent could contribute to inflation. This is more money chasing fewer goods and services. <<Does the fed affect this by changing liquidity and can they affect this without affecting interest rates?>> I believe the Fed can influence this effect is by increasing interest rates. Higher rates will slow spending and therefore, inflation. <<Does it make sense to compare the monetary growth to GDP growth?>> Not sure how to answer this question. However, I would think that monetary growth results in increasing spending which than affects the GDP. Hope this makes sense. Stock Bull

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