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To: Ian@SI who wrote (141683)	9/9/1999 7:23:00 AM
From: Lee	Read Replies (1) \| Respond to of 176387

Good Morning Ian,..Re:.The Fed has no business fighting US prosperity. The Fed agrees with you. <g> I think the confusion arises because the press and various pundits are misinterpreting Fed remarks. CORRECTED-Fed's Meyer sees risk of U.S. inflation biz.yahoo.com Echoing recent comments by Fed Chairman Alan Greenspan, Meyer said the central bank had no business trying to target equity prices directly when it sets interest rate policy. ''Policymakers should reflect the higher value of equities in their forecasts,''he said, adding that the key was to focus on the stock market's effect on the overall economy. Also, from Alan's speech yesterday, it's pretty clear that he's happy with the growth without inflation and the increase in wealth for Americans due to the remarkable performance of the US equity market. bog.frb.fed.us The accompanying expansion of incomes and wealth has been truly impressive, though regrettably the gains have not been as widely spread across households as I would like. How is this remarkable economic machine to be maintained, and how can we better ensure that its benefits reach the greatest number of people? Certainly, we must foster an environment in which continued advances in technology are encouraged and welcomed. Sounds like Alan is happy with the gains and just wishing they were more widespread. The main reason they want to consider asset prices now is so the forecasting models can more accurately reflect the economy. Apparently changes are being made at the BEA for calculation of GDP whereby, among other things, they are going to consider software a capital investment rather than an expense. These changes will possibly increase GDP and more accurately reflect actual contributions. That's why I think the Fed wants to include the affects of higher asset prices in their forecasting models since they've woefully underestimated GDP growth for years. And overestimated inflation. <g> I agree with you entirely. I think from what I've read that Alan agrees with you as well. <g> Best, Lee

To: Ian@SI who wrote (141683)	9/9/1999 7:37:00 AM
From: Lee	Respond to of 176387

Hi Ian,.. Re:.*OT* I forgot some remarks from Meyers which also refutes the general view that the Fed wants to control asset prices. bog.frb.fed.us Most important, policymakers should reflect the higher value of equities in their forecasts for aggregate spending and adjust monetary policy as necessary to remain consistent with the broad objectives of monetary policy. The key here is to remain focused on broad macroeconomic performance, responding indirectly to the movements in equity prices--whether the higher value of equities appears driven by fundamentals or otherwise--rather than to use policy directly to influence the value of equities. The whole speech was interesting if you have the time to read it. Long but interesting!<g> Best, Lee