To: freeus who wrote (19047 ) 2/29/2000 5:44:00 PM From: mauser96 Read Replies (1) | Respond to
Freeus, I listened to the entire testimony, and to the the Q&A session. It was my impression that when he said "long term interest rates will at some point be high enough" he was talking mainly about the corporate bond market . Remember the Fed has little if any direct control over anything but short term rates on government issues. If I'm correct in my understanding of this, he is saying the Fed will at most only act to reinforce a trend if it is already taking place in private markets. I don't know why he says that stock market asset values can't continue to increase at a rate higher than the increase in household income, unless it's because household income is the biggest source of money used to buy those assets. But this seems a gross over simplification to me. There are lots of other sources of money (corporations, foreigners, etc)and the definition of household income is seriously open to question. Economists are analyze their data, but the data is in many cases very flawed. Remember how a few years ago most of them were saying that productivity wasn't up because their data didn't show it? Now they all agree it's up. The obvious thing here is that they don't know how to measure productivity. I know mine is at least doubled by computers, the WWW, and SI, but how do you measure this?
