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

To: Knighty Tin who wrote (45973)	2/6/1999 7:22:00 PM
From: Mark Adams	Respond to of 132070

I haven't been paying much attention to housing, though Bonnie Bear mentions things in Si Valley are crazier than when I lived down there a few years back. Have to take her word for it, as I'm content letting someone else mow the lawn for now, as a renter. I agree that when people decide to sell stocks, there will be a deflation in financial worth disproportionate to the cash yielded from the sales. We've gotten several tastes of these over the past couple of years during the rather short market breaks. I enjoy picking up tasty treats at nice prices, when I'm actually able to put buy orders in. I understand that excess credit has made its way into the market rather than real goods, masking the inflationary impact as measured by the CPI. However, once I realized the marginal purchase price of stocks sets the total marketcap, I saw a magnified impact on financial asset bubble (almost another form of velocity I've not heard of) based on relatively small capital flows. That rather poorly worded lengthy statement says that the rate of growth of the monetary supply far exceeds the capital inflows which, at the margin, have inflated stocks. Now I don't have well thought evidence to support this position, but it's there if we look for it. So I agree with your overall prognosis, just don't see inflation as a problem until such time as one of the catalysts shifts sentiment. As for Argentina & Hong Kong, I think a weaker dollar helps their export situation to the expense of domestic living standards. I have to think that it would relieve some of the pressure that other devaluations have created.