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.

Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: JungleInvestor who wrote (42969)	10/14/1999 2:03:00 PM
From: Tunica Albuginea	Read Replies (2) \| Respond to of 116764

JungleInvestor, Alan Abelson in Baron's noted last Oct 98 that what the Fed essentially did by lowering interest rates is reinflate the deflating world bubble. He predicted that all that that would do is post pone the big pop. Big pop any day now. My Merrill broker says that Merrill is bearish and is looking at Dow at least 9000. Little guy on the street as usual is unconvinced. He is the last to buy and the last to sell. Patience, TA To: Bobby Yellin who wrote (42939) From: JungleInvestor Thursday, Oct 14 1999 12:50PM ET Reply #42969 of 42971 <<The Fed argued that its policy was not inflationary because the money supply in the United States did not rise unduly. The fact is that it had been exported to build the base for inflation abroad. As I showed in an article published in 1971, it is the world, not the national dollar base, that governs inflation.>> Great quote. Now to put this in context for the current world inflationary buildup, recall that at the end of last year interest rates were reduced an incredible number of times (believe in the 40's or 50's) by central banks around the world to forestall deflation. Milton Friedman determined that the money supply effects of interest rate cuts (or increases) are felt in 6 months to a year. A too rapid expansion of money supply is the cause of inflation. So we are now in this 6 month to year window and lo and behold, inflation is rearing its ugly head. The too rapid expansion of money supply causes commodities such as oil and gold go up in price. So two factors are at work currently in pushing up the price of oil: the interest rate cuts of last year and the OPEC supply cuts. Any future Fed rate hikes to reduce inflation will be felt 6 to 12 months out - so the horse is out of the barn.