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Non-Tech : Deflation -- Ignore unavailable to you. Want to Upgrade?

To: jwk who wrote (8)	1/4/2000 10:43:00 PM
From: JF Quinnelly	Read Replies (1) \| Respond to of 621

Economist Rosanne Cahn of Credit Suisse First Boston attributes U.S. disin-flation to three causes: worldwide over-investment that has created surpluses;... Austrian School analysis is that excessive credit expansion leads to over-investment; overinvestment results in too many firms and cutthroat pricing, cutthroat pricing results in businesses that can't cover their loan payments, not covering loans payments means bankruptcy, bankruptcy means the lenders of the excess credit being stuck with worthless paper. That may not be everything, but it's the concise version. The bad loans contract credit and shrink the money supply. The prime culprit is the initial excessive credit expansion. Some folks argue the Fed has been guilty of excessive credit expansion, especially when it cut rates three times in '98 to bail out LTCM.