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

To: Tommaso who wrote (35736)	7/11/2005 10:55:06 AM
From: philv	Respond to of 110194

It is interesting to note that the Central Bank's role is constantly changing. Sometimes it uses monetary policy to "fight inflation", sometimes to "defend the dollar", sometimes to "add liquidity" in case of a perceived "imaginary evil" which can be anything from wars to a large financial threat. And it does all this by money creation of one sort or another. Problem is, it can target one goal at a time only, which may then cause problems in another area, like the bubbles you mentioned. The ECB seems much more limited, as their governor states time and time again their mandate is to fight inflation, and not interfere in other aspects. It is a much simpler task, but politicians want more of course, so despite the tough talk, I bet they too will succumb, especially when prompted and criticized by the FED. The FED stands out as a golden example of how and what to do. <g>