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Politics : Ask Michael Burke

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To: valueminded who wrote (66600)	8/22/1999 11:19:00 AM
From: Mike M2	Read Replies (2) of 132070

Chris, the difficult part for me is when ,if ever, does AG do anything to prick the bubble before it bursts on its own. I did not expect a former Austrian economics disciple to let the bubble grow unchecked but after last falls triple rate cuts bears beware. It also illustrates very well that the "independence" of the FED is a mirage. At some point the currency and bond markets will impose their discipline on the stock market. While the decline in the value of the dollar will be inflationary for the price of imports I feel the deflationary force of the inevitable credit contraction concurrent with collateral damage to inflated asset values will over power the inflationary forces. Your reference to Japan implies the presumption that central banks can stop deflation - a view which is widely held by modern economists but the Austrian economists disagree. They believe that the central banks manipulation of interest rates causes the boom/bust cycle. The bust is the inevitable consequence of the excesses engendered during the boom. When this bubble bursts I believe the austrian view will gain considerable support. We shall see. ho ho ho Mike

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