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To: Victor Lazlo who wrote (123531)	4/11/2001 7:01:40 PM
From: Skeeter Bug	Read Replies (1) \| Respond to of 164684

>>monetary policy was too TIGHT given the lack of inflation, not too loose<< victor, we'll have to agree to disagree. 3 of the months prior to march 2000, money supply was cranked out at a double digit rate. tight is relative. was it too tight to keep the malinvestment ballooning ever higher? absolutely. but i don't think ballooning malinvestment is a good thing. in fact, i'd say a monetary policy that allowed such malinvestment and excess was, by definition, too loose. just want to point out the other side of the coin.

To: Victor Lazlo who wrote (123531)	4/11/2001 7:21:04 PM
From: pater tenebrarum	Read Replies (1) \| Respond to of 164684

the Bank of Japan tightened as well shortly before their bubble peaked...and by roughly a similar amount, and with the same lead time. the mistake of being too loose was made before the respective tightening episodes...beginning in the early 80's in Japan, and in the early '90's in the US. note, had the Fed not attempted to stop the credit expansion, the boom would nevertheless have eventually self-destructed - at a later stage, and with even more catastrophic consequences. and the Japanese government was in SURPLUS at the time of their bubble top...they're only drowning in debt now, after a decade of totally misguided Keynesian deficit spending/economic intervention. likewise, their banks were the biggest and strongest in the world when their bubble topped out. only several years thereafter had the situation deteriorated to the point that they now have an estimated 700 billion dollars (probably more) in dud loans on their books. don't forget, their bust is now 11 years old...the US bust is one year old, when measured from the market peak. the government surplus will soon be a memory imo...no more cap gains revenues for instance. the state governments are an indicator for that. they were the first to go into surplus, and are now the first to go into deficit once again. private sector debt is at incredible heights (non-financial corporate debt, financial debt, and household debt)...both in absolute, and relative terms, no matter which yardstick you measure it against, be it relative to GDP (which is btw. overstated by the statistics wizards at the dept. of commerce via hedonic indexing) or relative to income. already the weak borrowers are defaulting at never before seen rates of change...junk bond land is a veritable mine field, and consumer and mortgage credit defaults have begun to shoot up too. so we'll see in a few years time how the banks, the government's finances and the pension system look...i assure you, they will look worse than today. as for the interest rate cuts, hello? why do you think the stock market hasn't shot up on them, as it should normally do? surely you have heard one WS pundit after the other pontificate about how 'the bottom is here' due to the rate cuts, since that is what 'has always' (not true) happened? here's one example when interest rate cuts didn't help (after what was the second biggest asset bubble in US history): geocities.com economic downturns after huge credit and asset bubbles are different from the normal post WW2 business cycle...