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

To: John Pitera who wrote (4440)	8/27/2001 2:48:17 PM
From: John Pitera	Respond to of 33421

Friedman is one of the few talking about potential inflation risks down the road..... U.S. risks inflation in rebound -Milton Friedman Updated: Mon, Aug 27 6:18 AM EDT ROME, Aug 27 (Reuters) - The United States should pull out of recession in 2002 but will have to keep an eye on inflation when it does, Nobel prize-winning economist Milton Friedman said in an interview published on Monday. "With the very unusual Federal Reserve policy of successive interest rates cuts...the key problem once the recession ends in 2002 will be how to control inflation," Friedman was quoted as telling Italy's Corriere della Sera newspaper. The Federal Reserve has cut rates seven times this year, chopping three percentage points off the benchmark overnight lending rate since January. It now stands at 3.50 percent. "It was the right policy in order to give the economy a push but in the long term it was too inflationary because in the last nine to 10 months money supply growth has risen from nine percent to 10 percent," he said. Friedman inspired central banks around the world with his arguments that inflation could be controlled through money supply -- a policy keenly followed by former British Prime Minister Margaret Thatcher in the 1980s. Friedman, who won the Nobel prize for economics in 1976, said the U.S. economy was now in recession -- a word U.S. economists and central bankers have not dared to use -- but added that the long-term prospects for the world's largest economy had not changed. "I believe the United States is already in recession. The fall in production and employment show that clearly," Friedman said. "Whether or not we use the word 'recession' is just a question of semantics." "With the heavy drop in growth we have seen for a while, I wouldn't be surprised if the third quarter figures showed negative growth," he said. The Commerce Department has said gross domestic product grew 0.7 percent in the second quarter and is due to issue revised GDP figures for the April to June period on Wednesday. Analysts forecast the figure will be revised to zero.

To: John Pitera who wrote (4440)	8/28/2001 9:24:38 AM
From: JWest0926	Read Replies (2) \| Respond to of 33421

<<<Riveting NY Times article from Aug 15th of 1982..... the week of the start of the Famed Bull Market.....MER's>>> John: Great article John. Really puts today in a different light. Valuations at that level would be the mother of all buying opps!!! Listening to CNB.S., Analysts all morning talking about the "low valuations" we have now, and how stocks have come down so much, and are at "cheap" levels. It all comes down to comparison. Do we compare to last years levels, or historical ones? I think we all know the answer... JWest0926