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To: Giordano Bruno who wrote (29987)	10/19/2000 9:47:33 PM
From: pater tenebrarum	Read Replies (2) \| Respond to of 436258

he overlooks that the Fed is FAR from austere...on the contrary, while it has raised the price of money slightly (it's still below the real, non-hedonic,non-geometric weighted,non-seasonally adjusted inflation rate, which can be inferred from BLS's claims regarding year-on-year changes in energy prices. simply adjust the official inflation rate by the same error percentage), it is pumping in liquidity like there's no tomorrow...in fact, we have never before seen such explosive growth in the monetary aggregates than over the past 5 years. THAT's inflation, especially when compared to REAL, non-hedonically adjusted, non-chainweighted and otherwise distorted GDP growth (work out by deducting usual error percentage...you will still be too generous). the high oil price is a direct result of this profligate monetary policy, coupled with the ongoing depletion of the resource(non-OPEC output is falling already) and the non-existent energy policy of the administration. to use t-bond rates as a gauge of what Fed policy on short term rates should be misses the point completely. the only really feasible solution would be to take monetary policy out of the hands of this semi-communist central planning agency, and leave short term rates to the free market (they would have zoomed MUCH higher already, and long ago, as can be inferred from the HUGE amounts of liquidity the pranksters keep injecting to keep it on target). he's fantasizing about corporate bonds...yield spreads have just reached a fresh high (178 bps. for AA rated paper,800 bps. for junk), indicating that the ungodly paper pyramid is close to folding...to hope and ask for even MORE debt creation is complete INSANITY. on the contrary, the opportunity to pop the bubble while being able to blame outside forces (oil) should be grasped while it is here. i sympathize with tax cuts in general, as i think all governments are essentially thieves that are a necessary evil we have to live with...the less money they extort from us the better. but from a macro-economic standpoint, it is once again idiotic to throw even more gasoline on the fire of a desperately overheated economy that has developed bubble dynamics wherever one cares to look. in fact, any economic analysis, however cleverly conceived, that does not even refer in one sentence to the dangerous bubbles in credit and assets and the dire need to stop them at the earliest opportunity to avoid doing even more harm later, can't be taken seriously anymore. likewise, to accept the productivity data and reported corporate profit growth at face value in a bubble is simply foolish. especially as the error in government stats tends to compound over time, and thus distorts the picture evermore. credit spreads don't lie...they are saying that this unholy fantasy bubble and the illusion of prosperity it has produced are about to go the way of their predecessors and are going to render Fed policy completely irrelevant... i would suggest Mr. K. acquaints himself with the BoJ's post mortem of the Japanese bubble economy and its downfall...the same goes for Mr. McClueless and Al Magoo...who btw. imo knows very well what a monstrous debacle-in-waiting he and his bankster friends have created. they would learn there that a stock market the capitalization of which towers at 170% of GDP (well, not quite anymore...)is a prominent and clear sign that something is terribly wrong...and that therefore to wish for conditions that would serve to push it even higher is the same as saying "let's not go to the cancer operation now...who knows, it might hurt...let's rather die a horrible death next year, high on morphine..."