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

To: sjemmeri who wrote (87441)	12/22/2000 9:13:01 AM
From: Tommaso	Respond to of 132070

Yes, one can even see that on a small scale. Crowd behavior. Several people were hurt about 15 years ago when a local K-Mart advertised that funny Texas Instrument computer (TI-25? a dinky little thing) for $49.50. Hundreds of people tried to storm through the doors when they opened. I do think that as Fed head William McChesney Martin put it, "taking away the punch bowl" can help. This Fed has simply poured in more brandy whenever it looked as if people were sobering up. In that respect, it comes closer to John Law's Mississippi Bubble in France, made possible with fiat money.

To: sjemmeri who wrote (87441)	12/22/2000 10:31:43 AM
From: Thomas M.	Read Replies (2) \| Respond to of 132070

It's silly to think that Alan Greenspan could not have done anything to rein in the credit bubble. All decade, he has been pumping the system with money and credit like there is no tomorrow. Besides not fueling the bubble, he could easily have reversed some of the moves of the early 1990s which were enacted to help ailing banks. ------------------------------------------------------------------ Mogambo Guru 9241 54 Street N., Pinellas Park, Fla. 33782 DECEMBER 5 ~ Something must be going on that we don't know about. Otherwise, the Fed wouldn't be using this power to provide a constant avalanche of liquidity to the banks. This ability is an emergency power of the Fed. Like 007's "license to kill," it's to be used as a last resort. He doesn't shoot the snotty bellboy, even though he can. Likewise, this expansion of credit is not supposed to be used as a permanent super-charger. Nevertheless, new loans by the banks are expanding at a rate of $384 billion per year. GDP is expanding at only $237 billion per year. Additionally, the fractional-reserve ratio, if you use the required reserves and bank savings data provided each week in Barron's, is now a minuscule 1.2%. The textbook average is 10% or more. The Treasury also printed up another $3.9 billion in new fiat money. Ignoring the huge multipler effects of the Fed credit balance, this is still a straightforward combined $9.4 billion of new liquidity in one week. One week! -RICHARD DAUGHTY