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Politics : Formerly About Advanced Micro Devices
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To: Eric K. who wrote (113087)5/27/2000 11:44:00 PM
From: EricRR  Read Replies (1) of 1584437
 
central bank imposed lending rates and the common stock market indexes in Japan in 1989-1990

What have the Japanese paid for interest rates in the last decade? Something like 1%. Hasn't helped them. When the fed raised interest rates in the US in 1989, we emerged for the better. I do agree though about the inflation/oil price argument. I think inflation fighting is over rated, especially now that companies have sophisticated risk managment tools (derivatives) to control price swing risks. They don't need to raise prices during times of high price volatility.

What I don't think is over rated is "cleaning out the deadwood." Using monetary policy to temper speculative bubbles is prudent, and some of the excess has been taken out of the market, and with consumer spending behavior (negative savings rate). But you're right though, just as in managing forest fires, controlled burns can take on a life of there own.
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