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Strategies & Market Trends : ahhaha's ahs -- Ignore unavailable to you. Want to Upgrade?

To: frankw1900 who wrote (4200)	4/15/2002 1:46:29 AM
From: ahhaha	Read Replies (2) \| Respond to of 24758

I have a vision of an overdriven PA system and the ringing that continues after the microphone is turned off. This is a constructive or sympathetic vibration analogy. FED interference randomly generates both constructive and destructive interference on a "runs" basis. When their actions are fully random the result is that interference has no effect. The more skilled the FED decisions are, the more random is their impact on economy and markets. When and if Blinder gets in power, you'll see the stupidity effect accumulate so that reinforcing resonance builds to chaos. I don't know if the parallel is exact, but isn't higher low of POG the 'ringing' you get in the Fed example? The ringing is the alert from the golden bell that tells you that chaos is nearing. I believe you're saying I'm not really looking at this. "What you've learned is no longer true." That I'm looking at the wrong place and time. In order to avoid recession FED must pump, but pumping won't get people to act to create wealth. Only cutting taxes does that and cutting taxes is against the 'crat and academic law. Economy must continually deteriorate until tax cutting is forced, but that will only be grudgingly allowed and so the economy will descend into the Vietnam Memorial. OK then, we are here, now: AG finds himself on the depression trail and he's going to restart the pump. They've got the Japs to save. Due to the increasing base ("the pump") price level will rise, stock investment (money forced to superior return) will increase and and new investments, price rises, etc. are possible. The mechanism is more complicated than that. For example, not all prices rise simultaneously. Also, interest rates must rise for wealth creation to be restored. Certainly rising interest rates indicate rising loan demand, but more importantly at this juncture, rising rates represent that value is being restored TO output. FED pumped final demand doesn't cause rates or inflation to rise contrary to what FED fears. Neither does it provide an impetus for creative or productive output. FED pumping only does that during a period where demand is strong and causes investment in efficient output. Much of the existing capacity can't be encouraged to be utilized by FED pumping because it isn't efficient and its cost to utilize rises non-linearly. Where this is most notable is where FED pumped final demand leads to rising prices more than rising output and this has the immediate effect of rising profitability and rising stock prices. The quality of profits is low however, so one must get out before Labor Day. This can last for quite a while you say - [My assumption is] because old inventory, assets, lousy investments, are wound up, and new businesses, markets and sectors created. - This is the path you say we've started along? Most surely. If so, we're a long way from slack taken up, markets filled, sectors overinvested, and from this: Actually, the "slack" is small because unemployment didn't rise sufficiently and plant utilization cost is high. Which surely would be bad for stocks. In the stock market you are never interested in what tomorrow may bring. You have to, "sha na na na na na, live for today". compliments, FRB.