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To: Joan Osland Graffius who wrote (85196)	1/31/2001 7:12:53 PM
From: Tommaso	Read Replies (1) \| Respond to of 86076

Compared to the California State Government the Feds are models of cold rationality: Message 15278456

To: Joan Osland Graffius who wrote (85196)	1/31/2001 8:10:30 PM
From: pater tenebrarum	Respond to of 86076

Joan, MZM is now expanding at a 16% (!) annualized rate since mid November...i don't think there has ever before been a more inflationist monetary policy conduct by the Fed. it is absolutely laughable to insist that anything at all is contained...this is a level of excess that is frankly ALARMING. i firmly believe that this money creation is entrenching the structural deficiencies that are developing wherever one looks, extending the life of malinvestments, and bloating the ratio of the financial vs. the real economy even further. no need to look far...it's the usual suspects expanding their balance sheets, the ponzi pyramid that stretches from WS investment banks to the GSEs, engulfing the private sector in ever more unsustainable leverage to keep the bubble edifice afloat at all costs. then again, what can they do? their political instinct is telling them that they must do whatever it takes to deflect blame...i'm sure institutions like the Fed carry with them a sort of elephantine memory, a tradition of trained reflexes. and when the LAST bubble burst, their continued existence was at times in question. so they will work hard to either try and perpetuate the bubble, or failing that, see to it that blame will be laid at someone else's feet. considering the recent money expansion it is actually quite astonishing that the market hasn't blasted off...imo a sign that that the bubble has simply exhausted...it has grown too big already. that at least will remain my theory until market action proves otherwise. a successful reflation would likely induce a blast-off in commodities. i was pm'd today with a note concerning medical insurance costs, which are about to explode again this year, by some 13-18%, depending on the product. and anyone who drives, eats and heats a home is probably a bit taken aback by the constant 'no inflation' tune, however, it is true that other sectors, especially tech, have fallen into a deflationary spiral at the same time. ultimately i believe that the rising cost of living will continue to depress demand, which is deflationary overall. not an auspicious moment in time to be adding lots of debt to already bloated balance sheets.