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To: greg s who wrote (134127)5/4/2001 11:28:44 AM
From: GVTucker  Read Replies (2) of 186894
 
greg, RE: Is recession an unavoidable state? I've heard so much from the FED about "soft landings", are they ignoring the fact that a recession is inevitable as the economy unwinds?

I think that a recession is an unavoidable state. There are a lot of people smarter than me and more educated than me that would disagree. None of us knows for sure.

Note that you really haven't heard much from the Fed about soft landings; it's mostly been coming from Fed watchers.

And this recession (if that's where we're headed) is a LOT different than others I've survived (I'm 49).

Agreed. And that's one of the main reasons why I think that recession is unavoidable. Unlike some others, I don't believe that this is an interest rate-induced recession. Rather, I think it is from capital imbalances. And interest rate cuts in that situation won't help.

In fact, I've taken the more aggressive stance that interest rate cuts don't matter much in any situation, given the international movement of capital. The Fed has been reduced to merely reacting to market rates. If the Fed did anything else (i.e. move rates away from the direction of market based rates), then a sharp movement in the dollar would remove the impact of this action. That's why I see the Fed in a role of much less influence than a decade or two ago, and much less influence that most others believe. And that's why I'd just as soon get rid of the Fed's influence on rates and replace it with a computer. That's pretty far out on the opinion spectrum, though.
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