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To: Raymond Duray who wrote (10665)	2/22/2001 10:01:50 AM
From: A.L. Reagan	Respond to of 13572

seems to me that the over-cautious (ahem) creation of M-1 by the Fed in mid to late 1999, designed to counter a possible Y2K panic inadvertently caused the same sort of bubble as the efforts to deal with Uncle Ho Well, I believe you are correct on the effect of the liquidity injections, but there is quite a different long-term effect between irrational exuberance in monetary vs. fiscal policy, the latter IMO being considerably more time-consuming to work through. (A main reason, FBO others, is the capital that must be allocated to service the resulting public debt that doesn't find its way back to productive investment in the USA; exuberant monetary policy creates inflation, a little bit of which, like booze, ain't necessarily bad for ya, and any "hangover" can be worked through a lot quicker than paying down public debt.) But you are so right that Greenspan was totally irresponsible with the massive liquidity injections. Here he was tightening interest rates while printing money with great abandon. Like force-feeding coffee to a drunk. What you get is a wide-awake drunk. <g>