To: paul ross who wrote (13281 ) 6/17/1998 3:41:00 AM From: ahhaha Read Replies (2) | Respond to
The broadest measure of money is not a good gauge. We don't use M3 for that purpose. The FED did use M2 and L. Now they target everything which is the equivalent of targeting nothing. The outcome is fly by the seat of someone else's pocket book. There are many circumstances where demand or supply create the opposite effect of what you would expect. Look up J-curve on Excite. Other considerations are lagged response of one variable to another, exogenous distorting factors, marginal residues. You also have to consider the fact that you can't trust the reports coming from Japan. ceteris paribus . Ah, there's the rub. Transactions balances at banks are negative relative to the value of domestic output. People aren't spending what they get. Money sits in the post office, in the banks, at the BOJ. Everyone is afraid because the news is telling them that the sky is falling. The BOJ is making the same kind of error that the FED made on the way to making the Greeeaaat Depression, Greeeaaaat. But at least those clever little fellows haven't got around to raising Japanese short rates to defend the yen. If they do that, then yes, Martha bar the door because the world is headed for big trouble. In that case I'll substantially increase my gold holdings.
