The Justa and Lars Honors Bob Brinker Investment Club Thread Message Board

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Pastimes : The Justa and Lars Honors Bob Brinker Investment Club Thread

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Nov 13 4:00 PM EST

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To: Justa Werkenstiff who wrote (374)	7/19/2000 7:05:46 PM
From: Dave-in-MarinCa	Read Replies (2) of 10065

Justa: A visit to <http://www.piraz.com/moton.html> will be most enlightening. Mr. Moto's observation; "The dollar exchange rate appears tethered to the level of share-asset prices as they rise. The dollar can, however, begin to weaken and fall away. It's then that a surge of bank money lifts share-asset prices, and subsequently the dollar exchange rate fixed to the lift" Moto's work highlights the Feds dilemma in terms of attempting to control inflation in the midst of the bubble. Moto's graph of the average levels of temporary funding over the past few years shows the extraordinary efforts the FOMC is taking to hold things together. In order to attract additional foreign investment into the US to support the dollar, they choose to continue to liquefy the M2 to maintain equity prices which concurrently drives up personal consumption and inflation. They then maintain a tightening bias on the feds funds rate to attempt to control spending and inflation. Moto updates his report weekly. More dollars in circulation worth less as time goes on. How long can this go on??? Greenspan's staff knows that the new era productivity and NAIRU are not real...see this article just released by Robert Rich and Donald Rissmiller of the NY Fed <http://www.ny.frb.org/rmaghome/curr_iss/ci6-8.pdf>. Not only do they throw cold water on the productivity advance theory fundamentally altering the relationship between growth and inflation, they close by taking a swipe at the concept of a declining NAIRU during this period, the two fundamental underpinnings of the new era economics. The emperor (Alan Greenspan) has no clothes. I'm watching his actions, not his words.

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