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Strategies & Market Trends : John Pitera's Market Laboratory
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To: Yorikke who wrote (4579)9/1/2001 5:22:42 PM
From: Yorikke  Read Replies (1) of 33421
 
Interesting words from Fed Chairman:

"Even if the amount of money did determine prices and even if
the Federal Reserve System could determine the amount of
money, experience shows that steady prices would not
necessarily mean prosperity. It is true that violent changes in
prices are harmful. A very rapid rise in prices results in
speculation, in accumulation of inventories, and in unsound
undertakings, which later result in a collapse with falling prices,
failing business, and general distress.

But that does not mean that lasting prosperity is assured when
prices are steady. We had fairly steady prices from 1921 to 1929;
but during that period there was developing a speculative
situation which led to the collapse in 1929. It was during this
period that billions of unsound foreign loans were made; that
expensive and unsoundly financed apartment housing and
office buildings were erected far beyond the needs of the
people; that stock prices rose to fantastic levels. It was during
this period that the ground was prepared for the depression
which began in 1929 and from which we have not yet completely
emerged. An unchanged average of wholesale prices alone,
therefore, does not assure the people of lasting prosperity. While
prices are stable, destructive forces may be at work that lead to
panic and disaster. To require the Board to be guided in its
policies entirely or principally by changes in the level of prices
would prevent it at time from doing its best to serve the public
interest."

From Economic Balance and A Balanced Budget - Public Papers
of Marriner S. Eccles: (Former Fed Chairman)

prudentbear.com
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