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Strategies & Market Trends : Heinz Blasnik- Views You Can Use -- Ignore unavailable to you. Want to Upgrade?

To: Don Lloyd who wrote (2305)	6/10/2003 10:04:59 AM
From: GraceZ	Read Replies (1) \| Respond to of 4905

The problem with Mise is that he fails to separate a definition from a theorem, a statement derived from definitions. When money supply grows it means that output is rising because FED has to create enough money to fairly represent the value of what has been created by the effort of the people. This isn't so clear during a demand regime. Currently what is happening is the money supply is rising fairly rapidly, but output is low. What's happening to the money? It's sitting in M3 and a lot of it is going into foreign hands and being factored back into US Treasuries, so most industrial output is going into savings. Fed is only creating what is needed for transactional balances so there is no effective monetary policy in place now. That is, the Fed isn't trying to make the economy go with money creation.