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Non-Tech : Tulipomania Blowoff Contest: Why and When will it end? -- Ignore unavailable to you. Want to Upgrade?

To: KeepItSimple who wrote (2357)	12/28/1999 7:44:00 AM
From: KyrosL	Read Replies (1) \| Respond to of 3543

>Could it be because Alan Greenspan has been busy buying back >government debt with freshly-printed money? That debt hasnt >disappeared, it has simply been monetized at the fastest pace in the >last 15 years. Monetized??? The debt that the Fed buys is NOT monetized. The US government continues to pay interest on this debt just like it does to anybody else holding it. And it continues counting as part of the national debt. And believe me this debt is going back into circulation during the first half of 2000, when the Fed is going to start mopping up all this liquidity. It seems that you and some other SI sages have made a mountain out of a molehill when it comes to the rapid temporary increase in the money supply in the last few months, which to most observers is obviously insurance against any Y2K disruptions. For years the money supply has been growing at a rate hardly above the rate at which the economy expands. Then for a few months the Fed turns on the spigots to douse any potential Y2K problems, and you guys point to it as proof that the world is coming to an end, complete with comparisons with the Weimar republic and WWII China. The reality is that the US Government has never been in a better debt situation in its modern history, with public debt falling rapidly and the politicians showing relatively few signs of spending the surplus. This situation in the US is in sharp contrast to most other developed countries. Japan's debt is well over its GDP as a percentage (more than three times higher than the US in relative terms), and rapidly climbing. Italy and Belgium are also above 100%. Germany and France above 60%. The US is a model of fiscal responsibility compared to its industrial competitors around the world. Stop worrying and try to profit from it: the long bond, financial companies, and utilities are right now screaming bargains. And, remember, it is not inflation that you need to worry about but deflation. Deflation will hit in full force when the internet infrastructure spending boom starts to wane and internet-induced efficiencies start hitting the real economy with their full force.