Ramsey, you said, "The money supply is really a thing of the past. Unlike the old days, no one knows how that affects the economy any more."
In post 2550, Maurice said, "If there is a big, inflationary, creation of money, it doesn't just land in biotech and internet zones. Those zones were pumped up by maniacal bidding. It doesn't take any extra money in a stock market to raise prices.
Vishesh doesn't understand that. If prices double right across the market tomorrow and people trade at those prices, it doesn't mean there is any more money in the world.
Anyway, it wasn't a simplistic money creation which Alan Green$pan did to avoid Y2K panic. He was judiciously ensuring that in the event of a Y2K crunch, there would be liquidity. The extra potential liquidity didn't cause any financial disruption."
Message 15221764
You say money supply didn't create internet/tech bubble (because it can't). Maurice says money supply didn't create the internet/tech bubble (it was other factors). I am just glad that two great minds come to agreement that Greenspan's actions with regard to money supply did not cause the internet/tech bubble.
You both refute the statement which triggered this exchange, "Greenspan ended 1999 in a panic about Y2K," Murphy said in an interview last week. "Because of that, he started pumping up the money supply at literally a 50 percent annual rate in October and November of 1999. The real economy can't absorb money so fast, and this flooded into financial assets. It created a bubble for Internet and biotech stocks." Message 15221759 |
