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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Freedom Fighter who wrote (80288)	5/1/2000 2:00:00 PM
From: Tommaso	Read Replies (2) \| Respond to of 132070

I have just been studying the everything I can find on recent monetary figures to try to see what the Fed is really doing, and of course it is very hard to tell. Most of the monetary aggregate figures seem down in the last three months, but the latest (May1, published, to maybe April 17) graphs of MZM, the successor to M1 that's supposed to remove the "sweep" effect, shows gyrations that are not unprecedented, but still remarkable. It looks as if most recently the Fed did tro to anticipate a Y2K panic, then rapidly withdrew money when that did not happen, and then as rapidly reversed course again as a reaction to their own reaction. Prior to the Y2K spike up, there had been a decline since the LTCM intervention, and this decline looked much like what preceded the 1987 crash. That similarity may not have escaped their attention. Of course, there's a certain amount of noise in the figures, and also things happen that the Fed does not plan. The most extraordinary Y2K-connected aberration is that for a very short period the annual growth rate of the monetary base was approaching 50%--and then went abruptly to minus 30%. The graph resembles the path of a deliberately stalled airplane. The only thing I can make of all this is that, for sure, the Federal Reserve Board has a lot of confidence in its ability to guess what the public is going to do and in its ability to do what is best for everyone.