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To: Perspective who wrote (84430)	10/18/2003 2:19:38 PM
From: NOW	Respond to of 209892

""Bottom Line: over the last FOUR months, the annualized rate of decline in US Average Weekly Earnings is (-) 1%. Without income reflation [growth in personal income], there is virtually NO ladder for inflation to climb, ESPECIALLY under the auspices of CONTRACTING money supply." (quote with edits) Think about that. No growth in income in the strongest quarter in many a year. "... without income gains, wealth reflation will be the SOLE support going into an election year." By wealth reflation, Weldon means stock market and housing price gains. Yet that might be in jeopardy as the Fed actually appears to be tapping on the brakes by tightening the money supply. The Fed Hits the Brakes He documents at length the significant recent slow down of growth of M-2 and M-3. He asks: "CAN wealth reflation in the US withstand the TIGHTEST monetary conditions since the last great stock-market wealth DEFLATION ??? ....with the tightest monetary stance via long-term-of-short-term M3, since 1997." Then he offers this very interesting data from the Philadelphia Fed Survey: "While ALL the focus was on the admittedly robust OUTPUT data, we note the less-focused-upon "Special Question" segment of the survey, which asked: * If you experienced a decline in Production during the 2001 Recession (72.5% of all, did), has Production returned to pre-2001 levels? 85.7% replied NO." frontlinethoughts.com