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To: Bald Eagle who wrote (12445)	3/13/2000 4:23:00 PM
From: Hank Stamper	Respond to of 15132

"Maybe, I'm dumb, but if the previous interest hikes haven't slowed the economy, why do they think another one will? Also, why slow the economy as long as inflation isn't a big problem?" No, not dumb. Not by a long shot, I think. But, the economy's response to the Fed is slow and imprecise and that is why many smart people are asking the same question. It takes in the range of 12 months for Fed tightening to show effects in the broader economy. The economy is a huge complex system and, like most complexity, is only understood and swayed bluntly. Greenspan has a stone axe with which to hack down a bit tree and it takes time. As for inflation: it matters not what thee nor me think. If Greenspan sees inflation on the horizon, he will act and continue to act until the economy has been slowed to his liking. I guess he has the eye of a bald eagle and can spot the critter from afar. Ciao, David Todtman.

To: Bald Eagle who wrote (12445)	3/13/2000 7:37:00 PM
From: Chris J. Horne	Respond to of 15132

"why slow the economy as long as inflation isn't a big problem?" The thinking is that conditions exist (full employment, strong economy, wealth effect, high oil prices etc.) that have lead to inflation in the past. If the FED were to wait till they see inflation in the rear view mirror, workers already have inflationary expectations and will demand higher wages to offset. Many expenditures like social security are government pensions are tied to inflation. Increases there trigger more spending...a vicious circle that is hard to stop once momentum builds. The thinking is...that is better to deal with it by looking forward, rather than in the rear view mirror...and stopping the conditions that cause it..so it does not start.