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Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era -- Ignore unavailable to you. Want to Upgrade?

To: dougjn who wrote (189)	4/18/1998 4:55:00 PM
From: Freedom Fighter	Respond to of 1722

>I think Greenspan is not at all incompetent. I think he is worried >about the market's "irrational exuberance". He is also worried that >tightening in the U.S., given the Asian and especially the Japanese >backdrop, could trigger, rather than head off a crash. I agree that he has been worried about it for some time. I also agree that he is concerned that a monetary tightening could trigger a crash rather than remedying the situation. I don't know that he is necessarily incompetent. What you must understand is that it takes an expansion of money and credit to cause an increase in prices of any type. With no increase in money supply, all prices would tend to go down due to productivity improvements. That includes those measured in the CPI or assets like stocks, real estate, paintings, stock exchange seats etc...Since his focus has been strictly on CPI, (by choice or mandate) he may be overlooking the greater danger. History is full of examples of moderate increases of CPI causing only some minor discomfort. History is also full of asset inflations causing serious discomfort. Since it is clear that it is taking a large increase in money and credit to cause what is going on, it is clearly his responsibility!