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Politics : Stockman Scott's Political Debate Porch

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To: lurqer who wrote (20533)	6/16/2003 7:01:49 PM
From: Jim Willie CB	Read Replies (1) of 89467

an excellent article by Saville on money supply & velocity money velocity has slowed sharply, a terrible sign usually that means a recession is upon us is posting such an article a waste of time on this WMD thread ??? gold-eagle.com Will higher money supply growth help? by Steve Saville clips: rather than interpreting the fall in the GDP/M2 ratio as a signal that we need even higher money-supply growth a more logical line of thinking would be as follows: The 16.8% increase in M2 money supply over the past 2 years has had only a minimal effect on economic growth, so the problem clearly isn't a lack of money. Higher money-supply growth is therefore not likely to make things better. >>>>> it is a mistake to think that deflation is the problem. Deflation wasn't the problem in the 1930s and it is not the problem now. The problem in the 1930s, and the problem now, is that there was a massive asset price bubble fed by an even more massive credit bubble. Once you have allowed a massive credit bubble to form there is no 'inflating your way out of trouble'. The US money supply has expanded at a rapid rate over the past 2 years and all that has been achieved is that an even bigger problem has been pushed into the future. Read the interview with 89 year-old investment legend Seth Glickenhaus in last week's Barrons magazine, because he says it better than we do. To paraphrase Mr Glickenhaus, all the Fed does when it tries to inflate its way out of the mess it helped create is cannibalise the future. It seems as though the chorus clamouring for higher money-supply growth wants the Fed to cannibalise the future at an even faster rate. / jim

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