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

To: valueminded who wrote (66600)	8/22/1999 10:30:00 AM
From: Freedom Fighter	Respond to of 132070

Chris, I agree with you. Last time he telegraphed the hike so much a dead man could have figured it out. This time it is mostly the media and Wall St. saying it. I think the odds of a hike are lower than investors have been lead to believe. I also agree with you about "real rates". The Fed Funds rate is now 50 basis points below where it was early last year. Since then we've had an uptick in the inflation rate using the government's method (which I don't trust). That means that real rates are lower from two directions while the savings rate (whatever it really is) has fallen further. The way I see the world, if anything, we should have both higher nominal and real rates right now assuming last year's rates were appropriate to begin with. Where the market is in control we do. Where AG is in control we do not. Wayne

To: valueminded who wrote (66600)	8/22/1999 11:19:00 AM
From: Mike M2	Read Replies (2) \| Respond to of 132070

Chris, the difficult part for me is when ,if ever, does AG do anything to prick the bubble before it bursts on its own. I did not expect a former Austrian economics disciple to let the bubble grow unchecked but after last falls triple rate cuts bears beware. It also illustrates very well that the "independence" of the FED is a mirage. At some point the currency and bond markets will impose their discipline on the stock market. While the decline in the value of the dollar will be inflationary for the price of imports I feel the deflationary force of the inevitable credit contraction concurrent with collateral damage to inflated asset values will over power the inflationary forces. Your reference to Japan implies the presumption that central banks can stop deflation - a view which is widely held by modern economists but the Austrian economists disagree. They believe that the central banks manipulation of interest rates causes the boom/bust cycle. The bust is the inevitable consequence of the excesses engendered during the boom. When this bubble bursts I believe the austrian view will gain considerable support. We shall see. ho ho ho Mike