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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Ian@SI who wrote (44111)	3/20/2001 11:47:33 PM
From: Proud_Infidel	Respond to of 70976

Ian, The important thing that nobody seems to be talking about is what the real interest rates are versus what they historically have been. This is the culprit behind the slowdown. Even after the "aggressive" easing the Fed has recently done, they are still at the upper end of the 2-4% range. This is unacceptable for any economy even near the brink of recession. And the rate of inflation for January was 3.7% (I suspect this was an aberration due to energy prices; and will trend down closer to 2.5%) Thus today's funds rate is 5%-3.7% or a Real Interest rate of 1.3% about 1/2 of the historic average. This is a rather easy policy not an abnormally tight policy. And if one compares that with the beginning of this year (6.5%-3.7% = a real rate of 2.8%), that wasn't far off the average - a little toward the easing side. I would take issue with the 3.7% inflation rate; that was one data point and came at a time when oil prices peaked. Brian