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To: James Strauss who wrote (8275)	3/22/2001 10:30:27 PM
From: Jibacoa	Read Replies (2) \| Respond to of 13094

<<we should Replace the FED with a computer program that tracks the 3 month Treasury Bills...>> According to Mr.Laffer the "interest cuts" are not meaningful because virtually nobody borrows from the FED. Member banks recently had only $34 MILLION borrowed from the FED which was less than 1/2 of 1/1000th of the total member bank reserves. If the 3 months T-bill would get significantly higher than the discount rate, the banks could borrow all they could for a guaranteed profit. That is the reason the FED can not let the two rates get too much out of line, and why the FED just follows the 3 months T-bill. It is the rate of growth of the monetary base what ultimately influences or determines interest rates,inflation, the price of gold, exchange rates,etc. If that is the case, I guess the computer program that will be needed to regulate the rate of growth of the money supply is going to be more complex than one to follow the 3 months T-bills, so it seems we still need to have uncle Al at the helm for some time.<g> RAGL Bernard