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

To: JRI who wrote (5504)	7/2/2001 5:10:25 PM
From: Maurice Winn	Respond to of 74559

<Where do you get that the Fed is printing at a 3% rate? That is way below the current pump.. > That's their long term aim - keep inflation between 0% and 3% and preferably about 2%. Given the economic growth and huge productivity improvements from new technologies, they can print at a LOT faster rate than 3%. I didn't mean that they would always print at 3%. That's the minimum they'll do, even without productivity gains and economic expansion thanks to 5 billion people forming a globalized economy with the US$ as a major feature. They print fast enough, however fast that might be, to maintain a stable 2% inflation rate. When, as now, it falls below that and recession looms, they print like mad. When irrational exuberance is endemic, they squeeze it up and raise interest rates. The big question here is can they print fast enough without causing hyperinflation to avoid a recession. The theory of the doomsters seems to be that it's all out of kilter [like the dot.bombs] and can't be cured by 'growing out of it' but only by a cleansing credit destruction and asset devaluation and generalized panic. Japan has tried growing out of it for a decade and is still in the bog with near-zero interest rates. I think, given the absence of irrational exuberance outside the doomster cults and the relatively [in my view] tame adjustments of credit levels, market clearing, change of owner and asset revaluations, the Nasdaq and Dow will grow out of it nicely, thanks to my idol, Alan Green$pan. I was not so sanguine 4 years ago, when I feared a collapse of domino-style. For me, the key event was Long Term Capital Management, Globalstar and the Zenit crash, combined with the Asian Contagion. We escaped that - I was in genuine fear that there would be a self-perpetuating collapse. LTCM had huge derivative positions, including a big position in Globalstar. When the Zenit bit the dust, so did LTCM's camel's back, which was loaded to the hilt. The Zenit was launched from Kazakhstan on what was previously a MIRV [multiple independent targeted re-entry vehicle] ICBM [intercontinental ballistic missile] intended originally for delivering nukes to Hong Kong, Noo Yawk, Tokyo and anywhere else on the USA side. I loved that swords to ploughshares aspect. It was a great economic boost from the end of the cold war peace dividend. It was part of the great globalisation trend. Unfortunately, when it crashed, it nearly collapsed the whole globalisation house of cards thanks to huge derivative positions. It was just a test-run! Alan Green$pan passed with flying colours. The biggie, the dot.bomb and techstocks irrational exuberance, with Dow overenthusiasm, took stocks to Y2K heights, partly because of Alan's irrational fears about the mythical Y2K bug which was supposed to crash the world. When the threat passed, Alan started in on the irrational exuberance with a vengeance. People whined and moaned, accusing him of trying to destroy the world. But he appears to have yet again passed with flying colours. We are a over a year into the adjustments. The wealth effect has gone. Dot.bombs have gone. Unemployment is up. Market caps are down by multitrillions. Economies are stable. There is no hint of war [China decided not to go ape over Taiwan with a novice Bush - thanks in part to Clinton cheering Jiang up I dare say]. There's heaps of oil and prices have come down from the peaks and will fall further. There's all the gold anyone could want - everyone could get married 5 times with the amount of gold available for wedding rings. The sun is out. No comets in sight. All is well. Nothing can go wrong can go wrong can go wrong. The more they print, the faster stocks will rise [I mean over years, not just as a recovery from the current glitch]. That's my theory anyway, Mqurice