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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Tommaso who wrote (92218)	9/16/2001 9:40:32 AM
From: Freedom Fighter	Read Replies (1) \| Respond to of 132070

T, >>Some economists whose views I greatly respect admire the Fed for having done this. I am more inclined to the view that using the stock markets as a guide to policy leads to financial overcontrol and makes things worse in the long run.<< I think we have a very flawed monetary system - but the alternatives seem flawed also. IMO, money should come into the system at around the same rate as economic activity grows. The term "economic activity" is a tough one for me to define and measure though. I think the government stats on inflation and GDP are somewhere between interesting and useless in this regard because politics gets involved and these things are virtually impossible to measure to begin with for a variety of reasons. In the last fews years, we have also clearly demonstrated that 'new money' can be directed into items like stocks, bonds, real estate, collectables etc... without impacting CPI etc... IMO, if assets are not part of monetary policy, huge excesses can also occur even though the government stats say all is OK. So I think there are problems with the almost single minded focus on hazy things like CPI, employment, GDP, productivity etc.. that are all controversial to begin with. Now I don't I want the Fed valuing the stock market and real estate etc... But it seems very flawed to me to have a system where we pay no attention even if it is obvious to everyone but the loons that we have a real bubble on our hands. So I would like a system that has one of the pluses of the gold system. Money and credit growth was more of a free market activity and less the result of potentially flawed interest rates set by the Fed that result in too much credit growth. But I am not sure how to accomplish this without bringing in other negatives. At a minimum, I would be real happy if the mainstream would at least acknowledge that the current system sucks!