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Strategies & Market Trends : Market Gems:Stocks w/Strong Earnings and High Tech. Rank

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To: Jerry Olson who wrote (43645)6/8/1999 10:35:00 PM
From: j g cordes  Read Replies (1) of 120523
 
You know Fed govenors, they're inflation McCarthyists.. they see inflation under every bush and cover.

There's a dirty little cycle that occurs because of an interest rate hike sequence that has just the opposite intention. It goes like this..

1 high employment (Fed Gov thinks this is bad, must slow down)

2 but prices relative to productivity, commodities and ppi are good

3 Fed Gov lifts blanket on wages.. oh no, people doing OK, must stop

4 Fed raises bank lending rate and tightens supply

5 Public is smart, knows prices will rise because of Fed action

6 Public goes out and buys and buys and buys knowing prices will go up

7 Fed Gov says ".. ah hah, consumer out of control, raise rates more!"

Jim
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