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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: JF Quinnelly who wrote (64887)	7/20/1999 10:15:00 AM
From: Mike M2	Respond to of 132070

JF, the Fed will continue to feed the bubble until the US dollar and the bond market force it to restrain the credit bubble. Inflation is defined by the Austrian and classical economics as an expansion of money and credit beyond the supply of available savings and the needs of economic growth. In the 20s the Fed thought the expansion was sound because there was no product price inflation but the inflation was in financial assets much like today but today is far worse in many respects. In 1929 there was $2 of debt added for each dollar of GDP growth - last year each dollar of nominal GDP growth was financed by $2.38 of non-financial ( bank) debt and $2.79 of financial debt -source the Richebacher Letter. Mike

To: JF Quinnelly who wrote (64887)	7/20/1999 11:27:00 AM
From: Knighty Tin	Respond to of 132070

JF, By itself, the fact that our GDP growth is overstated by nearly double, would argue for the Fed's ability to cut rates again. However, since what growth we do have is totally the result of excess credit growth and huge debt creation, the weaker dollar, higher bond rates and ever-expanding trade deficit would argue for restraint. Also, the higher fantasy GDP growth means that the productivity growth AG is talking about didn't happen, and that is also a major part of the equation.