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

To: pater tenebrarum who wrote (82743)	8/8/2000 4:14:16 PM
From: Tommaso	Read Replies (3) \| Respond to of 132070

Heinz, I know that only zero or even negative growth of money supply is what it takes to make you happy with Fed tightening, but with such robust productivity figurees (skewed, I would admit, by creative interpretation and too much emphasis on electronic efficiencies--but increases nevertheless) an M2 growth rate of under 5% is essentially flat, and that's what we have been getting recently: bog.frb.fed.us Even M3 is looking pretty subdued. Gone are the bloated figures and the nutty spikes that accompanied LCTM and Y2K. There is nothing more for the Fed to second guess, at least for now, and the figures look steady. That so many people assume that moneatary growth is accelerating, or is bound to accelerate soon, is a good sign that the opposite is occurring. Now if we were on a real working gold standard, there would be a catastrophic contraction well under way, caused by the USA's incredible trade deficits. Even with pure paper, things may get rough, though. I am not saying that the Fed won't turn right around at the first bank failure and open up credit again, but for the last few months, though it hasn't bitten down yet, money has been firming if not (by your standards)tightening. What is the "natural limit" to credit creation? As far as I can see the only natural limit, in the absence of a hard currency, is a terrible inflationary adjustment, such as the USA has already had in the last 30 years, with a quadrupling in dollar ptices of many goods and services. [My latest sticker shock is having had to call in a plumber to fix a toilet that I could not take care of myself because I just had a shoulder operation. The gentleman spent nearly three hours wrestling with the tank and "rebuilt" it. The bill was $353.]