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To: DWB who wrote (33615)	6/29/1999 5:16:00 PM
From: Thomas Sprague	Respond to of 152472

Daniel, Thank you for taking the time to share your very insightful thoughts. TDS

To: DWB who wrote (33615)	6/29/1999 5:22:00 PM
From: Jim Willie CB	Read Replies (1) \| Respond to of 152472

<<The "wealth effect" does not exist. As most accountants--but too few economists--know, it is impossible for the economy as a whole to spend the wealth created by the stock market.>> from WSJ article not entirely true... check out lack of savings rate... that counters the wealth effect... either take out money on margin against stocks, or at higher interest rate build up credit card debt I admit I agree with most of what article proposes I find economists to be the most arrogant among all statisticians, while at the same time having the absolute worst track record why... is sustainable growth rate believed to be 3%? ... nonsense why? show me evidence? please no conjecture! is floor unemployment rate before inflation kicks at 4%? ... nonsense why? show me evidence? please no conjecture! unfortunately the FED now sees itself as the unstated custodian of the economy, not the money supply (as chartered in US Constitution).. FED now manages the economy by managing and speaking to the stock market... not all that surprising since babyboomers will push stock market to unprecedented highs... in 1960s buy Kodak stock, in 1980s buy Reebok stock, in 1990s just buy stock same economists predicted employmt based inflation when jobless rate went under 5% for first time in 1995... WRONG same economists reduce productivity levels when PC's drop in price, do not measure technology develpmts in service (huge) at all, do not measure tech devmts in banking (huge) at all again, economists are arrogant AND wrong 75% of the time / jim willie (statistician)

To: DWB who wrote (33615)	6/29/1999 8:16:00 PM
From: puzzlecraft	Respond to of 152472

Daniel, The WSJ has a flawed argument against raising rates in one case: "If I buy a stock for $50 a share and it appreciates to $100 a share, I definitely have more paper wealth. But in order to spend that wealth, I must sell the stock to someone else. Only then will I have $100 to spend, while the buyer will have the stock but not the money. For every credit, there must be a debit. Increases in asset prices cannot increase aggregate demand." The WSJ ignores the fact that rising stock prices enables increased margin borrowing, even when kept at the same percentage of equity, which does in effect increase the money supply. Not sure how they missed such a basic fact. The WSJ journal does say for every creditor their must be a debtor, maybe I'm missing something here. John P.S. I don't think rates should be raised.