THE INDUSTRIAL REACTION SPEED IS NOW MUCH MUCH FASTER THAN THE FEDERAL RESERVE'S REACTION SPEED
and therein lies the risk
Poultry in Motion, I like your line of thinking, the question is how do modern economists and Greenspan get more in sinc with changes in the economy, such that their easing and tightening actions maintain a tighter contact with the underlying economy.
Hopefully when the mkt comes back, it will self regulate itself better, and less extreme overvaluation will creep back in, as investors won't want to put themselves in a position getting slammed again by over valuation. This will allow Greenspan and co. to focus more on adjusting for the economy's internal forces.
Your "main point is that monetary policy is too restrictive
and the economy's internal forces have adjusted in the last ten years to become extremely sensitive and extremely capable of quick action
and that action relates to inventory replenishment, canceled orders, reduced mfg capacity, and layoffs"
I think part of the problem has been, that the mkt itself has been a big part of the economy, and the fact that it has been so out of whack, inflated, was a major source of risk and danger, to a staybil world economy. |
