Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Amazon.com, Inc. (AMZN) -- Ignore unavailable to you. Want to Upgrade?

To: KeepItSimple who wrote (75637)	8/28/1999 2:59:00 AM
From: KeepItSimple	Respond to of 164684

We know that AG is a student of economic history and that he feels the Fed in 1929 and the Japanese in 1989 both made mistakes that he doesn't want to repeat. Could these mistakes have been: "The excess credit which the Fed pumped into the economy [in the late 1920's] spilled over into the stock market - triggering a fantastic speculative boom. Belatedly, Federal Reserve officials attempted to sop up the excess reserves and finally succeeded in braking the boom. But it was too late: by 1929 the speculative imbalances had become so overwhelming that the attempt precipated a sharp retrenching and a consequent demoralizing of business confidence." -- Alan Greenspan, 1966 (emphasis mine) Gee, I wonder what he was thinking after that move in the stock markets from last October through this April? Now Japan: "Looking back, we now feel that we should have applied the brakes on the excessive boom much earlier... However, back in those days, as [consumer] prices were not rising, it was difficult to obtain people's understanding for a policy aimed at achieving sustainable economic growth by monetary tightening" -- Yasushi Mieno, Former Governor, Bank of Japan Sound familiar???? The talk about inflationary pressures and the need for being pre-emptive is the excuse. The economic numbers are going to keep rolling in showing strong growth, strong consumer spending, tight labor markets, etc -- all the stuff he talks about outside of the headline PPI and CPI. We just got a low 2nd quarter GDP number but I note that most forecasts are calling for a pickup of economic activity in the 3rd quarter (Jul, Aug, & Sept). Also, I should note that the effects of these two rate hikes won't show up in the numbers yet -- it takes a while for them to work through the economy (in fact, we are still working off the rate cuts from last fall). Also, the last few PPI and CPI numbers have been so low that all he needs is just a small upturn in them and the markets are going to get nervous. Thus, he should still have plenty of ammunition to hike again if that's what he wants to do. I fully agree with you: "He knows what he needs to do, the question is does he have the courage (and political will)."