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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host -- Ignore unavailable to you. Want to Upgrade?

To: Dr. Anthony Keyodo who wrote (6230)	7/27/1998 1:31:00 AM
From: DessertRat	Read Replies (1) \| Respond to of 42834

Increasing M2 Money Supply Projects A Higher Consumer Price Index Increases the in money supply have generally been followed by an increase in consumer prices within twelve to eighteen months. Many monetary models use what they call M2 to measure money growth. M2 is composed of currency, bank reserves, checking accounts, saving accounts and money market accounts. M2 bottomed at the beginning of 1993 and has been moving sharply higher while the consumer price index has been trending lower. Economists project that the discrepancy between M2 and the consumer price index will not last forever and that the consumer price index will bottom and follow M2 higher. For example in 1971 the money supply surged 9% and by 1974 the consumer price index was moving sharply higher. The bear market during 1973 and 1974 was one of the worst on record. By the end of the 1970's the Fed pushed interest rates to 21% to curb growth in the money supply. Recently monetary growth has eased a bit but if we sustain the level of monetary growth that we have had over the last few years it may definitely lead to increasing inflation. --- I got this off the Thomas Nelson's Weekly Market Overview e-mail that I get once a week. If this increase in M2 is correct and the CPI has to rise in concert eventually then we may be topping out here shortly. Listening to da Brink today he said when the bear comes it will be bloody, like down 20-40%. He said the internet hypesters need to be taken out and given a lesson. Doesn't Brinker use the M2 in his model. Wonder if the M2 warning above plays intoo his sell model??????? Also, da Brink went scuba diving I see. Sure as hell hope Bob Jr. tags along as a snorkeling safety buddy. Would hate to see ol' Bob become a real shark snack, given the level of the market were at right now. Who then would tell all you guys when to sell out and go to cash??? DessertRat adding my $.02