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Pastimes : All Clowns Must Be Destroyed -- Ignore unavailable to you. Want to Upgrade?

To: Crimson Ghost who wrote (36813)	5/31/2000 5:59:00 PM
From: pater tenebrarum	Respond to of 42523

i agree with this dude...the current WS BS propaganda is just that...i have always pointed out that due to Al's baby step policies the Fed is simply NOT tight...the Fed funds rate always has to be seen in the context of inflation and growth. that fact it has gone up 175bps. from its low is by itself a meaningless datum.

To: Crimson Ghost who wrote (36813)	5/31/2000 6:01:00 PM
From: Defrocked	Respond to of 42523

"Tightening that is too slow, that is, in which interest rates rise more slowly than inflation, allows economic inflation momentum to build until the juxtaposition of monetary gradualism and continued strong growth with rising inflation implies that the Fed is behind the curve." Good synopsis. Lucasian economists believe that fully anticipated monetary actions will have no real effects on the economy. This is a problem with "Gradualism" as conducted by Greenspan's FOMC. Furthermore, almost all recent Fed actions have been fully discounted by the market before implementation. The noticeable exceptions were the Fall of '98's 75 bp pumps and this winter's rash of Y2K liquidity. IMO these actions were not fully anticipated and thus constituted loosening which translated into extraordinary, albeit temporary, real growth increases in excess of 6%. In this vein, "no action" by the Fed on June 28th may well be interpreted as "loosening" by equity participants as an excuse to "party on" despite tangible, ongoing inflation risks.