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Pastimes : Ask Mohan about the Market -- Ignore unavailable to you. Want to Upgrade?

To: Zeev Hed who wrote (12434)	12/28/1997 5:29:00 PM
From: Simon	Read Replies (1) \| Respond to of 18056

<<< I fail to see>>> One of the problems with life is that something always comes along "as the English say" to muck up the situation which we failed to see before. The S & P and Dow charts all look like hell at the moment, and I believe in charts.

To: Zeev Hed who wrote (12434)	12/29/1997 4:04:00 PM
From: Mike M2	Respond to of 18056

Zeev, the problem I have with Friedman's position (Nobel prize notwithstanding)-g- is that I feel the big mistakes were made prior to the crash not after. Excess money and credit inflation caused the boom which had to go bust inevitably. The problem with money and credit inflation is the resulting malinvestments and maladjustments in the economy which are created. Currently we see overinvestment in SE Asia and overconsumption in the U.S. Friedman's focus on the contraction of the money supply overlooks the fact that volume of nonbank financing -the securities and call money mkt was almost four times greater than the volume of bank financing. Source-The Richebacher Letter What is very disturbing about the current situation is deregulation and competition banking has resulted in credit inflation on an unprecendented scale in my opinion. The chief economist of the Federal Reserve in the 30's wrote "What followed our easing was not, as might have been expected, a commodity price inflation,but a growth of speculation in securities and real estate,which helped bring about the collapse and the depression of the 1930's . No country profited by that;on the contrary,the entire world suffered from the disasterous deflation which followed." The Richebacher Letter 1050 southeast 5th Avenue, suite 100, Delray Beach, FL 33483. Mike