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Gold/Mining/Energy : Newmont Mining(NEM) & Newmont Gold(NGC)
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To: Ahda who wrote (269)7/4/1999 12:46:00 PM
From: ahhaha  Read Replies (2) of 587
 
That's the point. You don't need to know how the created money will be spent though you precisely know how much you've created. The potential lies with the people, not with the pile of money created. Authority can't push on a string. You also don't need to know very accurately money velocity, productivity, borrowing propensity, investment tendency, or spending proclivity. You only need to fix the rate of money created. Adjustments can be made and the market's independent determination of the rate of interest can be considered in this adjustment. Errors and adjustments in money created are greatly ignored by the market's determination of the appropriate cost of funds. The opposite, errors in the fiat fixing of the price of money, has great and subtle force, and is not forgiven without bringing about the culture destroying effect of placing every individual at the neck of every other.

In the vicious regime the rate of interest is fixed and money is allowed to flap in the wind. In the virtuous regime money is fixed and rates are allowed to flap in the market's whim. The FED actually tried this to some extent during the late '80s, but they abandoned it for unknown reasons. I suspect that they implemented the strategy in a lackadaisical manner because they had proven in '82 that they couldn't truly stay with a purist's non-intervention policy. They had lots of good to do and denying pretense would be interfering with the need to create prosperity. They can't let mere plebeians work and create wealth. This is the job of an august body armed with Humphrey-Hawkins.

Sometimes the above approach is called monetarism, but the monetarists don't believe in it because they want to be august in July. They want to control the rate of money growth by interest rate manipulations. This strategy is worse than whatever it is the FED has been practicing since '95 which could be called hodgepodge or ersatz. They watch everything and fly by the seat of your pants. The result is that FED introduces random exogenous shocks into the system unwittingly.

The advent of LTCM-like events will be the norm as long as ersatz is maintained. Ersatz is pretense to knowledge and it's the intellectual belief in control that brings about chaos unbeknownst. It is their belief that they can do it which will be killing us. They haven't seen the enemy because the enemy is them.
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