FED TALK Message Board - Msg: 13279189

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To: taxikid who wrote (3)	3/24/2000 11:07:00 PM
From: Kelvin Taylor	Read Replies (3) of 94

let me see if I can understand your position: "there are millions of future americans that will be affected if the economy is not protected." protected for what? inflation? most people don't realize that inflation is a direct result of money supply. the Treasury printing extra dollars to increase liquidity. gas prices now affect millions. so should the Fed regulate gas prices? "The real estate prices are soaring. the kids of tomorrow will not be able to afford housing if this continues." so higher interest rates HELPS the kids of tomorrow buy a home? c'mon. prices rise because of supply and demand. higher rates would reduce the demand, BUT the higher costs reduces the amount of disposable income. you pay a higher cost for the same asset. "Interest rates must go up to slow the lending." ok how high should the prime rate go? 10%? 12%? in 1979 it was 21%. are you aware of how the economy was doing in 1979? double digit inflation and 21% interest rates. Why? the Treasury was printing tons of money and the excess cash was causing the added liquidity to the money supply. "Everyone I know is going for aggressive investment. they are dumping all of their 401's into the market in high risk "junk" stocks." how does what someone else does effect your personal investment decisions? IF they lose every penny and you invested conservatively, you win regardless, right? don't know exactly what you mean by "junk" stocks, but here again its one's own decision on how to spend, invest, or gamble with their money. "...the tech stocks. many aren't worth the paper they are printed on." your right about this one. the stock is worth only as much as someone is willing to pay for it. whether $1 or $1000 per share, stocks are ALWAYS valued at the current price. it your decision on whether or not to pay the price to own it. The Fed should have no jurisdiction on what I pay for a loan. Market factors(supply and demand) and NOT a appointed Federal Commitee, should regulate the money supply. Keep in mind there is nothing wrong with wealth creation. Punishing achievement thru regulating the money supply(higher rates to deduce liquidity) and overtaxation only hurts one's standard of living.

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