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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Knighty Tin who wrote (37695)	11/27/1998 8:41:00 PM
From: Tommaso	Read Replies (2) \| Respond to of 132070

I have been having a quiet private debate with "ahhaha" about economic prospects and found myself on the spot needing to justify some ideas, and having gone to that much trouble, thought I would post this (which tells me that puncture of the equity bubble may have to be a result of something other than Fed action, the Fed being properly and effectively focussed on larger economic issues than the welfare of speculators or the downfall thereof): To: ahhaha (who wrote...) From: Tommaso Friday, Nov 27 1998 5:10PM ET In order to reply with any intelligence to your message, I have had to locate the data: stls.frb.org Over the four years 1970-1974 M2 I watched M2 grow from 589.59 to 859.67 and was alarmed at this 45% icnrease over those four years. And sure enough, virulent inflation followed, as predicted by Friedman models. Over the four years 1983-1987 I watched M2 grow from 1965.51 to 2749.99, and was alarmed at the 39% increase. But this time, no acceleration of inflation followed. Having hedged against what I considered inevitable inflation, I lost a lot of money. Now I want to go back and see what we have for the four years leading to the present [which I did, and found a 24% increase over the past four years, much lower than the earlier figures, and I conckude that Fed loosening can continue for some time yet without settinmg off much inflation] I decided that Friedman had underestimated the capacity of the economies of the world to increase output of every sort of commodity and manufactured good, and I still think this is the best way to explain why inflation declined: more goods than money were produced.