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

To: Shane M who wrote (88327)	1/12/2001 1:44:57 AM
From: miklosh	Read Replies (1) \| Respond to of 132070

"Greenspan would like to be able to cut rates without sending stocks through the roof and that's what he got this time. " yes but for how long. who's to say the mania can't pick up where it left off? Sure the dot bombs are dead, but money's sitting on the side, and how long until it pours right back into the NDX. the fundies are dying to own softie and friends, and when the cap equip co's wake up, all the sell side anal ists will be screaming to buy them. Then the the dorks on cnbc will be in cysting that we buy the big NDX co's 'cause amat is a leading indicator for tech stocks. bwthdik ........argggggg...decaf

To: Shane M who wrote (88327)	1/12/2001 9:51:48 AM
From: Mike M2	Respond to of 132070

Shane, many market observers comment about excessively tight money or high interest rates. Few seem to be willing to consider the possibility of excessive monetary ease or low rates. The Greenspan bubble of the 90s has been fueled by unprecedented monetary ease. The Austrians ( economists) define inflation as the expansion of money and credit beyond the supply of available savings and needs of economic growth. I don't want to dig up the precise numbers but some months ago the credit expansion had exceeded four times GDP growth and Ten times savings. For historic perspective the credit/ GDP ratio peaked at 2.2 in 1929. These numbers tell us that much of the credit expansion is used for unproductive purposes. The monetary aggregates do not tell the full story because the greater part of credit creation has occurred outside the banking system. The Austrians also state that in order to maintain its stimulative effect credit must expand at an ever increasing rate but as Mises said if the expansion is not voluntarily abandoned the end result will be a currency catastrophe. The private( corporate & personal) debt loads are at or near historic highs. At some point the real economy will not respond see the US in the 30s or Japan now. We have been told by the monetarists that printing money can prevent deflation but it has yet to work in Japan.