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To: Perspective who wrote (38140)	11/16/2000 4:59:25 PM
From: pater tenebrarum	Respond to of 436258

that sounds reasonable. however, money supply growth in excess of economic growth (non-hedonic) IS inflation per the classic definition. imo what is happening is similar to what happened in '98 - all the money flows into supposedly riskless assets, while anything that smells of risk is being shunned. to wit, the complete drying up of liquidity in the high yield bond arena. total credit is also on the retreat according to the latest data from the Fed, probably a sign that banks are getting scared of potential loan loss problems and pulling in their horns. if the expected liquidity trap scenario develops, the money supply could begin to contract sharply, in spite of the Fed's efforts to the contrary.