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To: Yaacov who wrote (128508)	3/1/2001 2:43:10 AM
From: Paul Engel	Read Replies (2) \| Respond to of 186894

Yaacov - Re: 'Do you remember the last rate cut in January? Feds cut the rates and on the same day the NAZ closed in red!" Everybody keeps missing the key points. During 1999 and most of 2000, inflation was LOW but the economic GROWTH was HIGH. What did Greenspan do? He raised RATES to SLOW down the economy - and brought it to either a STAND STILL or into REVERSE. All during this time, energy costs were skyrocketing independent of of Greenspan & the Fed - and that alone would have slowed the economy. Because the economy was robust for most of this period, the added energy costs were absorbed by an efficient economy with the benefits of economics of scale. Now - there are signs of inflation - DESPITE 5 or 6 rate hikes by Greenspan - yet the economy has ended up in the toilet Essentially - Greenspan has shown that the LEVERS HE PULLED didn't produce the desired result. Instead of heading off inflation, he killed the economy and INFLATION THEN KICKED IN. Energy costs can no longer be absorbed by economic expansion and econmies of scale. This goes against Greenspan's perceived Magic Touch - he doesn't have any - in fact, he's like King Midas in Reverse - and has taken a Golden Economy and turned it into a piece of trash. Now, Greenspan has boxed himself in to a corner - and may end up exactly where Jimmy Carter and Paul Volker put us in 1978 - 1980. Paul