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Strategies & Market Trends : ahhaha's ahs -- Ignore unavailable to you. Want to Upgrade?

To: FR1 who wrote (307)	10/19/2000 9:14:05 PM
From: ahhaha	Read Replies (2) \| Respond to of 24758

I never really understood why the feds raised the rates to begin with. Because of inflation? - No, it never showed up. The free market backed up rates because the propensity to inflate was rising. The FED belatedly followed the market. They have to start their price fixing way early before any significant inflationary factors get in gear. By doing this they slow final demand and therefore cool the propensity to inflate. This is built on the demand management theory of economics. It's a hollow theory, but they think it works. The problem is that it's draconian. The free market would do this slowing much more gradually. It is a pathology of our society and proof that university economics instruction is a failure that free markets are not trusted. In California they want to quit the free market in power because they don't think it works. The FED exists because \the country doesn't trust the free market in money, yet the FED must always stay within its bounds. When it doesn't you get sturm und drang and that's what we've had in markets over the last 2 years as the FED has made mistake after mistake. But Milton Friedman says AG is doing a good job. Because of low unemployment? - No. Well, the feds felt 5% was almost impossible and then 4.5% was impossible. So far we have gone to 3.9% without inflation. Don't believe all these clowns who think full employment is bad. This is posturing by some and a show of stupidity by others. The theory is that in full employment wage demanders will successfully sue for inflated wages. That theory fails because the US has not hiked trade barriers to protect America from competition and enable unions to succeed in inflating wages. That theory will work when there's world wide labor compensation parity which 5 years ago I estimated would occur by 2007. Because stock market made too many people money? - Maybe, Ridiculous. You will never understand the macro economic environment by thinking that more wealth is bad. This is what Larry Chimerine thinks. but that's not very rational. Indeed. In the meantime high interest means lower euro, death to IPOs, trouble for foreign markets, squeeze for tight margin big businesses, tight capital for T, WCOM and no place to move if you really do have a crisis. You have to understand that all of this has been blown out of proportion to such a wild extent that it boggles the mind. These are marginal effects which hardly impact economy at all. Has oil price increase hurt you? If you think so, you are living in the hysterical world of Wall Street. You can't do that and succeed, because Wall Street will forget about all of it in two seconds and go chasing the next thing the group think will cook up.