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To: Earlie who wrote (60168)	1/21/2001 1:03:31 PM
From: Mike M2	Read Replies (1) \| Respond to of 436258

Earlie, an you note we need to look at the US experience during the 1930s or Japan during the 1990s to remind us that we cannot print our way to prosperity. In order for easy money to stimulate the economy we need both willing lenders and borrowers. The credit markets illustrate that risk is being reevaluated albeit too late. The US has never experienced such a rapid credit expansion for unproductive purposes. In addition, there is excess capacity in many industries. Corporate America is going into the next recession with record high debt levels. They have sacrificed their cushion for the shareholder economy in which the objective to raise stock prices as quickly as possible via esops, share repurchases, M& A activity, cost cutting all of which are quite effective in the short term at the expense of the long term. We also have a heavily indebted consumer with record low savings rate. Many do not appreciate that the unsustainable decline in savings rate accompanied with dissaving was a major boost to the economy. One critical difference between the 30s and Japan in the 90s is that now we have a record current account deficit which will limit the ability of the Fed to cut rates at some point as the overvalued US $ is bound to decline. Mike