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

To: KyrosL who wrote (714)	12/28/2000 11:53:48 AM
From: ahhaha	Respond to of 24758

The question is extremely germane. It is those factors which control the FED from shooting everyone in the foot. One half of the political spectrum in the US would like to hike trade barriers and minimize the competitive effect of cooly labor, but it is only that labor rate that keeps our domestic demand for compensation from rising. If that occurred, the FED would have no choice in the matter. If they resisted, the free market would do what it did in late '79, and that is send rates up regardless of what the FED was doing. In the final analysis the FED can't actually control anything. They can't push on a string. That's in the final analysis and long before things get there, they send us through sturm und drang. That's exactly where we're headed. The FED can interfere enough to create the cyclicality without invoking chastisement through the global disciplinarian, the dollar. There's no guarantee that free trade and globalization will persist. Once there's labor cost parity world wide, it is practically assured that it won't. You'll be hearing for calls of labor solidarity that won't recognize national borders. That's when the world's central banks will have to confront the will to inflate, the labor beggar-thy-neighbor, with constraints on capital flows and internal restraint on the creation of money demanded by an inflating labor. There is the further consideration that nations will prevent their central banks from doing this. Then you get economic dark ages which the 'Bugs are praying to see. The only way that that won't happen is that the FED change its operating procedures to targeting money, any money, and ignoring, or leaving, interest rate determination exclusively to the market where it naturally belongs. They don't do that now because they fear the market and it means they don't have the control they think they have. The control is ephemeral, but it does allow them to think they are doing good. It's important to the pretense of knowledge to believe that the results of pretense is the doing of good. One only need watch Greenspan as he walks with briefcase in hand headed towards the Fed building to see the body language that tells you how much he's being rewarded for his view that he does good.