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Politics : Ask Michael Burke
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To: BGR who wrote (77315)3/9/2000 10:02:00 AM
From: Mike M2  Read Replies (1) of 132070
 
BGR, sidestep what question ? I have a problem with the present imbalances the unprecedented expansion of credit combined with the wealth effect of the stock market is fueling excess consumption which means savings are diminished. Savings and investment are critical to long term prosperity. Rising stock prices does not mean that the productive capacity of the nation has increased proportionally. This bubble has become a wealth transfer from the retirement savings of working Americans to Wall St and corporate insiders. there is no doubt that the economic stats are distorted to create a new era mirage when in fact we are in the mist of a bubble of historic proportions. It is not enough to raise rates if credit growth is not restrained. Even with the Fed's baby steps rate hike credit creation has been highly inflationary ( In austrian terms) I have noted before that in 1929 ( the year of tough love -g-) credit growth peaked at $2.20 for every dollar of GDP growth we are currently running at $4.50 of credit for every dollar of GDP growth. This means an enormous amount of credit is being used for speculative purposes rather than productive purposes. like every bubble in the past in will end in a most severe dose of TOUGH LOVE & ECONOMIC VIOLENCE! HO HO HO Mike
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