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Politics : Ask Michael Burke
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To: Earlie who wrote (82895)8/11/2000 9:04:08 PM
From: Tommaso  Read Replies (2) of 132070
 
Hi Earlie,

I keep trying to point out that--althought it could turn around instantly-- the money supply figures as reported by the Fed are rapidly tightening. Whether this is deliberate fed policy, or some incipient credit caution by banks, or what, I do not know, but the figures are --let's say-- interesting:

bog.frb.fed.us

If you scroll down you see M2 at under 2% and a big negative number for M1 (which doesn't mean much any more because of bank sweeps). Given current inflation and productivity numbers, this is contractive. If the Fed hold this line for a few months, or if this is a self-reinforcing contraction of bank credit, the markets will begin to react as in late 1998, and any weaknesses in banks could become obvious.
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