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

To: sjemmeri who wrote (87432)	12/22/2000 1:01:47 AM
From: Thomas M.	Read Replies (1) \| Respond to of 132070

Did Fed policy contribute to the South Sea and tulip bubbles? Yes, it was excess credit expansion that fueled them. newaus.com.au Tom

To: sjemmeri who wrote (87432)	12/22/2000 8:42:57 AM
From: Tommaso	Read Replies (1) \| Respond to of 132070

That's an extremely good question. Those earlier bubbles occurred when there was no money to be had except gold and silver money, and yet the bubbles occurred anyway. I guess in both cases there had been a century or two of monetary inflation caused by new supplies of gold circulating, and maybe that could be considered. Also, various panics of the later 1800s and the 1929 crash occured as money was hardening again, following wartime inflation (greenbacks int he firt instance). Maybe what happens is, the harder the currency the faster the bubble collapses when it does collapse. With M2 currently gowing at about a steady 6% even as economic activity slows, maybe we can get through this without as disastrous a collapse as in the past. Disastrous, just not as disastrous. Incidentally, the guys on CNBC are terribly funny (and intelligent) early in the morning talking about various things. Cheerleading gives way to ironic understatement, which is more my style I guess.