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Strategies & Market Trends : John Pitera's Market Laboratory
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To: macavity who wrote (6907)1/24/2003 4:00:47 AM
From: Yorikke  Read Replies (2) of 33421
 
"I am now a firm believer that prudent economics and free markets are inconsistent with popular democracies. No one will vote for tough love so Austrian Theory will always remain that - just theory."

We created the FED to act independently in the interests of what is considered the best path toward long term economic growth and stability. Its independence sets it apart from the hubbub of democratic proclivities towards instant gratification. Greenspan has simply opted to make himself a media Person, rather than follow in the path of previous chairmen who were aware of their responsibilities and who actually seemed to understand economics; rather than how to make one's friends rich and the media adoring.

If one looks at the expansion of the money supply coupled with the expansion of government backed loans it is quite a chunk of money. An amazing amount of money actually. Frightening if one looks at other instances where such a major expansions of the money supply has occurred.

If we are undergoing asset deflation in a period when the money supply is exploding, interest rates are low, and government backed loan corps are pumping out loans as if having every American in a home is the first line of homeland security, then what is actually going on deep down in the economic plumbing? What happens when somebody has to turn off the money tap? Or it's realized the dam wasn't built to hold that much credit?
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