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Strategies & Market Trends : ahhaha's ahs
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To: Ron Dior who wrote (5558)11/4/2002 2:05:28 AM
From: ahhahaRead Replies (1) of 24758
 
'cretintious is in big trouble now. Apparently he banned an SI pet over interest rates. Both thought FED should raise or lower interest rates now or in the past. The problem is that they think FED should do it, rather than the market. That makes what they say trivially false even though 99.99% of economists agree that FED should interfere with the market and fix the price of money.

Grace mentioned to me that I said almost a year ago that FED should raise rates a little. They would have done that had they continued the rate of permanent injection that they had going at the time. Although the permanent creation rate was only going at the public's currency preference demand rate the residual effect was to allow price increases without commensurate output increases. Accordingly, in order to avoid insidiously growing inflationary pressure which was strongly evident across many months of the price component of the ISM, FED had to slow permanent injection or raise fed funds rate a little. They elected to slow permanent.

That was a remarkable accomplishment that went unheralded in the financial press. The only public comment I've heard was Kudlow's disapproval. What FED has done is nipped inflation in the bud. That has profoundly positive consequences for non-inflationary growth.

The best driver of final demand is to lower the inflation rate by maintaining monetary discipline just when all the fools are crying for more money to boost GNP. It's wrong for the central bank to attempt to stimulate final demand. Final demand can never be a valid policy objective.

The FED is doing what 'cretintious and his opponent want although they both don't think FED is doing that. In any event conditions are ripe for people and corporations to proceed to do business and make money.
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