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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Activatecard who wrote (24505)	9/2/1999 10:00:00 AM
From: Les H	Read Replies (1) \| Respond to of 99985

Sounds more like the bias is to tighten... economeister.com economeister.com economeister.com GERMAN PRESS: MILTON FRIEDMAN SAYS US STOCKS BUILDING UP BUBBLE 04:58 EDT 09/02 FRANKFURT (MktNews) - The United States economy is presently confronted with a situation similar to the period before the 1929 stock market crash, according to legendary economist Milton Friedman in an interview with the Handelsblatt Daily newspaper Thursday. "There are, without doubt, real dangers for the US-economy", the Nobel prize-winning economist warned. One of the biggest problems is the rapid growth on the stock market, even if part of the growth can be explained in terms of higher productivity as well as technological improvements, Friedman said. Even though higher returns on investments are to some degree "legitimate", problems may arise if the markets overshoot and build up a "bubble", Friedman argued. "There are no ways of defining a 'bubble', but we know they exist. And the US-stock-market shows some characteristics of a bubble," Friedman judged, adding that, "this could pose a real threat to the continuation of the extraordinary upswing in the past nine years". Still, a possible market crash would not have the same effects as those seen in the 1920's or the crash in Japan in the 1980"s, according to Friedman. The devastating economic effects seen in both these cases were mainly due to an "extremely" deflationary monetary policy afterwards, which Friedman does not expect would be repeated in the US. Nonetheless, the outcome would depend on the US Federal Reserve's monetary policy in dealing with any crash, he added. "Generally, I would keep an eye on the development of money supply rather than rate decisions," Friedman advised.