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

To: BGR who wrote (48407)	2/23/1999 11:00:00 AM
From: Cynic 2005	Read Replies (2) \| Respond to of 132070

<<Another thesis is that in the 30's tight monetory policy was more responsible for the depression than anything else. Even Japan is being adviced to inflate their way out of recession now.>> You are WRONG! The Feds tried to flood the system with liquidity. No borrowers. You can lead the horse to the pond.. Only thing they didn't do is air-drop dollars, which is essentially what Greeny and his cohorts are doing now.

To: BGR who wrote (48407)	2/23/1999 11:34:00 AM
From: yard_man	Read Replies (1) \| Respond to of 132070

Interesting thesis, but we are inflating now at a time of very high asset prices, very high consumption, while the economy appears to be booming ... with consumers already so optimistic. If there is a large setback in asset prices, where many folks now have put traditional savings into equities -- what will adding liquidity do, when the "printing presses" have been working overtime just to keep up the status quo? Japan is a little different, granted, but you can see the failure of this kind of policy, at least with their problems ..

To: BGR who wrote (48407)	2/23/1999 12:04:00 PM
From: Earlie	Read Replies (1) \| Respond to of 132070

BGR: < The rest of the world sits on piles of cash> The horrendous fall of many of the world's stock markets has destroyed real wealth. Ditto, the currency crunches. Yes, the central banks of the world are printing madly, but to have this foolish exercise work, one requires CREDIT-WORTHY borrowers. They are few and far between around the globe. Additionally, one also requires a population that is inclined or has a need to borrow. Again, not much showing up outside of the U.S. and to a lesser degree, Europe. The Japanese savers poured a river of cash into our markets last year, and in my opinion, provided the offset for the reduced flows to domestic mutual funds. They have been retreating back home for months, unfortunately much lighter of load, having lost what I estimate to be 35-40% due to currency and market wounds. I think the cash on the sidelines is not consequential. Additionally, there is a slow but sure (finally) exodus of professional dough from the tulip. The support comes from the e-bananas and the dip-flips,....not your most savvy investors, and probably prone to the normal grip of panic once the losses start to come. Their use of massive margin also suggests that once they feel some sustained pain, their exodus is likely to clog the air lock doors. Sir Alan's blood pressure can be measured directly in the bond prices and bond spreads. We are almost right back to the levels that locked the bond markets last Fall. My comfort level as a bear mounts now with every passing day. (g) Best, Earlie

To: BGR who wrote (48407)	2/23/1999 12:25:00 PM
From: Mike M2	Read Replies (1) \| Respond to of 132070

BGR, you refer to the Monetarist explanation of the Great Depression while it is very popular I disagree with them. I am a fan of the Austrian school of economics which believes central bank manipulation of interest rates creates the boom /bust cycle and the bust is the result of the excesses engendered during the boom. For a detailed explanation of the austrian perspective see Murray Rothbard's " America's Great Depression" . One fatal flaw to the monetarist explanation is their focus on the money supply which ignores non bank financing. consider that nonbank financing -the securities markets and call money markets was almost four times the volume of bank financing bank lending went into the securities markets and it was the collapse in market values of lower grades bonds which the banks held which hurt the banking system. in spite of attempts to reflate by the middle of 1932 the spread between interest rates on Baa bonds and treasuies had surged to 7.5 % more than 3 times their level prior to Oct. 1930 ( The Richebacher Letter). The current situation is alarming due to the unprecedented credit growth via the securities markets and non bank financial intermediaries. I will post some links for austrian related readings The Richebacher Letter 1217 St Paul St. Baltimore , MD 21202 Mike