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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Moominoid who wrote (4180)	6/27/2001 10:44:16 AM
From: Kailash	Respond to of 33421

David, this sounds right. What Duisenberg says, however, is not that it's outside his mandate but that it wouldn't work if he tried: "There's nothing that monetary policy can do about this," he said. "The most that we can do is create a stable atmosphere." Surely he's wrong -- on the other hand, we may be exaggerating Greenspan's power. Kailash

To: Moominoid who wrote (4180)	6/27/2001 10:54:32 PM
From: John Pitera	Read Replies (2) \| Respond to of 33421

David, you are right about the narrower mandate of the ECB to that of only price stability. Richard Medley has suggested recently that there is increasing awareness of also including encouraging growth, but it's not official yet Message 15940553 but a comment last night on CNBC from esteemed global advisor Richard Medley did catch our attention. Medley noted that he has heard speculation that there is already a movement underway to adjust the ECB's policy mandate to focus on growth as well as price stability. While such a change may be a ways away, the fact that Europeans seem to understand the flawed nature of the mantra is at least some semblance of a euro positive. Medley's firm is very well connected in the policy community in the US, and his contacts are global in nature. The FED, has the conflicting policy goals of promoting price stability, but also full employment (maximum non inflationary growth) Theoretically, the Fed has done a good job in the 1990''s as most economists including the FED felt that 5% was the absolute lowest unemployment could go without generating unacceptably high rates of inflation. The past 5 years has been even more impressive when we consider that the US has had very significant additional workers added to the labor pool via the influx of undocumented foreign workers. Now the obvious question is, was this all a product of a runaway speculative mania, in the US economy and in the US Financial markets and we're destined to see a virtueless cycle tailspin ala Japan of the 1990's. Only the Historians will be able to conclusively answer that one. John