To: UncleBigs who wrote (64781 ) 6/28/2006 9:30:43 PM From: russwinter Respond to I like Contrary Investor's comments on the whole "going too far" babble. BTW, the rest of this 6/29 issue is a must read.Will The Fed Overshoot?…As you already know, this has been one of the most oft-repeated theoretically rhetorical questions in the mainstream financial media as of late. With Fed governor after Fed governor now publicly proclaiming their newfound disdain for inflationary pressures, the financial press is wondering out loud whether the “Fed will go too far” in the current cycle? they’ve already gone way past “too far” when it comes to participation in global liquidity creation. It’s becoming virtually more than clear that the Fed, along with their global compadres at the BOJ (Bank of Japan) and PBoC (People’s Bank Of China), are simply currently reaping and now forced to deal with what they had sown many years ago in terms of excess liquidity creation. Funny, when the central bankers are tightening global money/credit conditions, investors seem to immediately begin to ponder whether they will go too far in their monetary tightening activities. But when excess liquidity (growth in monetary aggregates well above and beyond GDP growth) is expanding rapidly, as it really has done again beginning many years back, almost no one seems to ask whether central bank actions to promote this liquidity creation will “go too far”, although that’s usually always the case.
