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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: CalculatedRisk who wrote (4596)	4/18/2004 11:45:28 PM
From: TH	Read Replies (1) \| Respond to of 116555

CR, Here is a link to the interview. It appears to be pretty complete, but I'm not sure as the segment on 60 minutes was over 30 minutes long. This was a very interesting interview. cbsnews.com TH

To: CalculatedRisk who wrote (4596)	4/18/2004 11:54:17 PM
From: mishedlo	Respond to of 116555

Hussman hussmanfunds.com Presently, I believe that fears about a substantial and near-term series of Fed tightenings are misplaced. Under considerable pressure from market expectations, the Fed may very well change its verbal policy “guidance” and may even raise rates one-quarter to one-half percent in the months ahead. But to believe that the Fed is on the verge of an aggressive policy of serial-tightenings like 1994 is to miss both the general basis of Fed decisions, and the substantial differences between then and now. How the Fed thinks about policy Probably the most important thing to understand about Fed policy is that rate hikes are not intended to slow down the economy, but rather, to slow down demand growth that threatens to outpace the ability of the economy to produce supply. An understanding of this is essential to interpreting Fed actions. It is simply wrong to believe that the Fed has any interest at all in slowing the rate of economic growth. Its objective, when it hikes rates, is strictly to ensure that demand growth does not outstrip capacity constraints by so much that inflationary pressures emerge and cut sustainable growth short. So the key questions when you consider Fed actions are those that involve the strength of demand growth, the amount of slack in economic capacity (unemployment, capacity utilization and the “output gap” between actual and “potential” GDP), the existence of inflationary pressures (including the valuations of stocks, housing, and the U.S. dollar), and the Fed's estimate of sustainable economic growth (based on population growth and productivity trends). Once you understand these considerations, it is easy to place the Fed's actions in proper context, and to understand the distinctions between 1993-94 and today. ....... Read the whole thing a good article Mish