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To: Ilaine who wrote (106736)	6/5/2001 6:24:34 PM
From: craig crawford	Respond to of 436258

>> Well, Tice is right that the discount rate was cut. Unfortunately, and I don't think they had any way of knowing this, the rate cuts did not keep up with actual deflation. << true. they simply could not print enough money and instill enough confidence for people to borrow and spend. goofball types like milton friedman and larry kudlow believe that you should just print your way out of a deflation which is total nonsense. >> Buying government securities doesn't help when banks are unwilling to discount commercial paper and corporate bond rates skyrocket << not only would the banks not want to lend to anyone, people took their money out of the banks as fast as they could so there were no reserves. this is the free market at work and the govt always tries to interfere and stop it. economists always try to come up with dozens of different ways to explain why we had this big bust and what the govt should have done to stop it. well we had a big bust and depression for the same reason we always will. stupid govt bureaucrats bowing to political pressures meddling in the financial process instead of letting the free market do it's work. that is such a basic concept i dont understand why most economists (and ag) can't understand it.

To: Ilaine who wrote (106736)	6/5/2001 6:30:36 PM
From: NOW	Read Replies (1) \| Respond to of 436258

"overproduction, tariffs, unproductive foreign loans, bank defaults, asset deflation, and a breakdown in the foreign exchange system" Good thing none of those are facing the world economies anytime soon...

To: Ilaine who wrote (106736)	6/5/2001 6:46:49 PM
From: yard_man	Read Replies (1) \| Respond to of 436258

>>But I think the matter was probably out of the power of the Federal Reserve to control, because I think - and this is a working hypothesis, subject to revision - that the main culprits were overproduction, tariffs, unproductive foreign loans, bank defaults, asset deflation, and a breakdown in the foreign exchange system. << I think all Tice and others are saying is: The above items were simply symptoms of a larger and earlier disconnect between banking policies and fundamental longer term economic constraints ... What's wrong with the Austrian's idea that investment must be supported by savings and not simply primed by credit unrelated to the same? Doesn't this make sense in a world of limited resources -- you can direct capital (economic resources such as labor, raw commodities, etc, -- not $$s) either to the satisfaction of current wants or further investment in productive capacity? And that these balances must needs be set by a marketplace and the only way to do that properly is for money / credit creation be constrained somehow by savings -- foregone current consumption? Certainly there is little of this relation captured in our current system, no?