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Politics : Formerly About Applied Materials

AMAT 223.95

-4.8%

2:59 PM EST

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To: akidron who wrote (24039)	9/10/1998 3:57:00 PM
From: 16yearcycle	Read Replies (2) of 70976

Aki, I am suspicious that this is a set up because I know you know the answer, which is not straight forward. Interest rates have tumbled going into most previous severe recessions, or outright depressions, going back a few hundred years. However, this has appeared to be a function of a too tight monetary policy prior to the recessionary period, or restrictive lending practices leading into decreased financial activity. I am referring too the end of the cycle. A too easy policy creates the over activity in the first place. This current situation is not unusual. Now rates drop to prop up activity. A chart of the period then causes one to see rates dropping going into the negative period. Yet, the lower rates help. As you have noted, much of this activity is actually the digestive period after the meal was waaay too big. Tweaking interest rates helps the indigestion, but gorging is the cause of the problem. Greenspan and the gang are way too cute here."we are not central bankers to the world" type talk. A too tight policy on "real rates" here is not helping. We should be helping. AG was very late in 1990, perhaps his only mistake. I think he is about to repeat it.

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