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Politics : Idea Of The Day -- Ignore unavailable to you. Want to Upgrade?

To: Merlo who wrote (39787)	5/31/2001 4:23:31 AM
From: IQBAL LATIF	Read Replies (1) \| Respond to of 50167

In depression era FED had no tools to fight a slow down, the 'gold standard' was the major culprit, the amount of money created was to be equal to the amount of gold in national reserves, the interest rates were kept high so as to avoid the flight to quality to gold by the investors. The tools you see today like 'liquidity' or say MZM were just not possible in the gold standard era. Higher interest rates in a economy that was slowing killed the goose that laid the golden egg.Please look at the depression era it was a totally different ball game fought with archaic rules. The mankind was at the verge of a new exponential burst with electricity, railroad and wireless communication introduced to the means of production, this was an era that in annals of our collective history will be remembered as point where our collective growth curve went very very steep, whenever that has happened we have seen a rationalisation of progress, Fed helps us steer us through these extremes, I think we are now at a new break through on our exponential growth path and of course present tools of judging economic growth are just not enough to measure the undercurrents with great efficiency. The bubbles are created and bubbles are pricked but the growth path is well defined and over a period FED like all of us will learn to live with new realities. Until such time bumpy rides and extreme movements are part of our economic history.