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

To: Skeeter Bug who wrote (37763)	11/29/1998 6:54:00 PM
From: Tommaso	Respond to of 132070

If it keeps up at this rate (money growth) inflation is inevitable. But it looks to me as if the Fed is just making ad hoc adjustments to try to give banks and brokerages time to figure out how to extricate themselves from this web of derivative commitments. I don't think it's going to work. The minute the Fed tries to bring M2 back down to a reasonable--say 6% annual rate--growth, money will flow out of the equities markets, and as we have seen recently, only small outflows are sufficient to move the averages dramatically downward. There almost was a self-sustaining contraction under way when the Fed made three cuts in a row. They can't do that many more times. Or so I think. I am just an amateur trying to figure out how this boat operates as it goes down the cataract.