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Strategies & Market Trends : Three Amigos Stock Thread
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To: James Strauss who wrote (15965)6/26/1999 5:08:00 PM
From: j g cordes  Read Replies (1) of 29382
 
"When inflation was in the double digits in the early 80's, it was fed by the anticipation of higher prices."

This conversation could easily get vague, I erred in broadening the agrument. My contention is that the Fed doesn't need to raise rates, you took the position that a couple of 1/4 points is OK or even good. I don't agree because there's nothing that needs to be slowed down, dampened, quelled, supressed, calmed, or regulated right now. Its a useless exercise of Fed power attempting to keep the speculative equities market in line. Its bubble management not inflation management.

It runs the risk of psychologically priming the anticipation of higer prices pump on some future inflation by seeding the thought there's real need to worry. It creates a price supportive and price raising environment in which producers feel encouraged to raise prices for oil, raw materials, wages, rates and fees.. even if actual market forces point the other direction.

If there's no real inflation then the Fed doesn't need to jawbone about it in the first place. If there is inflation (and I'd agree that the equities market is a form of inflation) then lets let the market self adjust and settle its own bid/ask without Fed intervention.
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