Booms, Busts, and Recoveries Message Board

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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: tradermike_1999 who started this subject	10/30/2000 12:25:01 PM
From: tradermike_1999	of 74559

Irwin Keller on Greenspan screwup: cbs.marketwatch.com These conflicting trends have created a dilemma for Mr. Greenspan and his central bank colleagues. If the Fed thinks inflation is about to get out of hand, it will raise interest rates -- possibly as soon as the middle of November. You can imagine what this would do to the stock market. But there is a real risk that the economy will slow more than the Fed thinks, since higher oil prices are taking lots of buying power out of the economy. Meanwhile, many business loans have turned sour and the banks are beginning to tighten up when it comes to extending new credit. This would seem to call for the Fed to cut rates. But easier money now would only fuel the fires of inflation. And the money supply is already growing rapidly, anyway. Of course, there is a third alternative; the Fed could do nothing, leaving rates where they are. But then, we might wind up with less growth and more inflation, otherwise known as stagflation. Maybe Alan Greenspan should quit while he's still ahead

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