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To: Joan Osland Graffius who wrote (56531)	7/19/2000 10:21:55 PM
From: pater tenebrarum	Read Replies (2) \| Respond to of 116912

Joan, unfortunately not. the only guidance available are historic disinflation boom/credit + asset bubble combinations. unfortunately every one of them progressed in a slightly different manner. all that can be said of the current one is that it clearly is a credit induced crack-up boom in the Austrian sense. it appears that the activities of the banks and the non-bank financials, mainly the GSE's, are constantly supplying more fuel for the bubble. this is obvious as the assets of the GSE's always tend to grow especially fast whenever the stock market looks shaky. since the only limit the Fed is putting on credit creation are its puny short term rates, the party seems to get wilder as time progresses, especially as real rates are now basically negative if one simply annualizes the latest headline PPI/CPI data. considering that BLS puts out highly dubious bogus numbers, it is highly likely that real rates across the curve are now in effect negative. there has been an incredible acceleration in all types of bank lending this year, and since the Fed accommodates all demand at its funds target, the printing continues apace. logic dictates that there has to be a limit...and one market observer who employs a lot of mathematical/statistical modeling in his work, Bob Bronson, holds that the limit has already been reached. however, he has reached that conclusion in a roundabout way via analysis of the stock market,commodities and leading economic indicators. it is not that he employed a model that specifically shows when the liquidity trap state is arrived at. i will ask him if he knows of any such model...i'm sure somebody must have thought of this already. hb PS: Bronson expects a deflationary, Kondratyew winter type denouement for stocks and the economy, so his work definitely recognizes the credit bubble as one of the main future millstones.