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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: smolejv@gmx.net who wrote (5225)	6/24/2001 2:23:29 PM
From: Ilaine	Read Replies (2) \| Respond to of 74559

Friedmann's magnum opus lays out in great detail how the Great Depression in the United States was largely caused by deliberately deflationary policies pursued by the Federal Reserve and the US Treasury. So it would take more than a newspaper interview for me to think he's changed his mind about that. Particularly since it doesn't appear to be recent - he talks about production at 4% - we haven't had that for over a year. >>FRIEDMAN: The economic recoveries had nothing to do with the monetary policy, they were fed e by a genuine technological progress. But after the crash the federal banks reacted wrong both times, because they reduced the money supply. Thus it is most interesting to watch, how the current experiment is doing. This time the monetary policy differs fundamentally from that in the past. It is very unusual. Here's the scenario: Unemployment is approximately four per cent, production grows by four per cent, the inflation rate is somewhere close to two per cent. What would you do? ZEIT: Probably go for a restrictive monetary policy instead of lowering interest rates. FRIEDMAN: Exactly. In any case you would not pursue an expansive monetary policy. However, exactly this has been occurring in the USA since some time - with the danger of landing in an inflation. <<