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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Jim Willie CB who wrote (5677)	1/21/2004 1:41:11 PM
From: russwinter	Read Replies (1) \| Respond to of 110194

<Russ, any thoughts on a refinement of points?. First, I have a question of Mr. Richenbacher. Is he aware of the inflation breakout story? Having listened to Greenspan before, I've noticed that if theoretical questions like these are asked, he just goes off into the Land of Oz. I would ask him SPECIFIC questions relating to evidence of the serious cost input inflation and bottlenecks underway. You could cite example after example, such as the ones we've posted here. Just a few, please note last question: Mr. Greenspan, copper prices are now $1.12, do you consider that serious cost input inflation? Is it isolated? Mr. Greenspan, UPS and Fed Express just increased rates 3%, do you consider that inflationary? Mr. G, Masco just increased prices on home insulation by 7%, do you---? Mr, G, standboard used in home building has gone from $150 per thousand BF last year, to $500 today, do --- ? Mt. G, ocean shipping rates are up 400% since August, do you consider---? Mr. G, crude oil price is now $36 and natural gas prices are $6, do you---? Mr. G, here is a list of various steel price increase in the last four months, do you? Mr. G, here is a chart showing the powerful uptrends in the prices of corn, coffee, butter, soybeans, and wheat over the last four months, do you---? And on and on, and on, I've posted dozens like these lately. The finally question is, "What do you consider the role of the Federal Reserve to be as it relates to maintaining price stability? And if yes, that's the job of the Fed, the clincher, "Do you have a staff at the Fed, that pays attention to price stability in the real world, outside the Land of Oz?

To: Jim Willie CB who wrote (5677)	1/21/2004 5:44:07 PM
From: Mike M2	Read Replies (1) \| Respond to of 110194

Jim, in the 60's AG " When business in the United States underwent a mild contraction in 1927, the Federal Reserve created more paper reserves in the hope of forestalling any possible bank reserve shortage. More disastrous, however, was the Federal Reserve's attempt to assist Great Britain who had been losing gold to us because the Bank of England refused to allow interest rates to rise when market forces dictated (it was politically unpalatable). The reasoning of the authorities involved was as follows: if the Federal Reserve pumped excessive paper reserves into American banks, interest rates in the United States would fall to a level comparable with those in Great Britain; this would act to stop Britain's gold loss and avoid the political embarrassment of having to raise interest rates. The "Fed" succeeded: it stopped the gold loss, but it nearly destroyed the economies of the world, in the process. The excess credit which the Fed pumped into the economy spilled over into the stock market-triggering a fantastic speculative boom. Belatedly, Federal Reserve officials attempted to sop up the excess reserves and finally succeeded in braking the boom. But it was too late: by 1929 the speculative imbalances had become so overwhelming that the attempt precipitated a sharp retrenching and a consequent demoralizing of business confidence. As a result, the American economy collapsed. Great Britain fared even worse, and rather than absorb the full consequences of her previous folly, she abandoned the gold standard completely in 1931, tearing asunder what remained of the fabric of confidence and inducing a world-wide series of bank failures. The world economies plunged into the Great Depression of the 1930's. With a logic reminiscent of a generation earlier, statists argued that the gold standard was largely to blame for the credit debacle which led to the Great Depression. If the gold standard had not existed, they argued, Britain's abandonment of gold payments in 1931 would not have caused the failure of banks all over the world. (The irony was that since 1913, we had been, not on a gold standard, but on what may be termed "a mixed gold standard"; yet it is gold that took the blame.) But the opposition to the gold standard in any form-from a growing number of welfare-state advocates-was prompted by a much subtler insight: the realization that the gold standard is incompatible with chronic deficit spending (the hallmark of the welfare state). Stripped of its academic jargon, the welfare state is nothing more than a mechanism by which governments confiscate the wealth of the productive members of a society to support a wide variety of welfare schemes. A substantial part of the confiscation is effected by taxation. But the welfare statists were quick to recognize that if they wished to retain political power, the amount of taxation had to be limited and they had to resort to programs of massive deficit spending, i.e., they had to borrow money, by issuing government bonds, to finance welfare expenditures on a large scale. .." gold-eagle.com He was critical of the Federal Reserve's easy money policies of the 20s so why has he persued an easier policy? If Rep. Sanders needs more tell him to talk to Rep. Ron Paul so they can team up -g-