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To: PaulM who wrote (31333)	4/8/1999 12:54:00 AM
From: Zardoz	Read Replies (1) \| Respond to of 116798

"Negative real interest rates would explain a great deal and put inflation at about 5% annually, give or take. That sounds about right to me." I'd suggest a little higher, but close... 6.25%?

To: PaulM who wrote (31333)	4/8/1999 1:35:00 AM
From: Investor-ex!	Read Replies (1) \| Respond to of 116798

Hi PaulM, I believe you have the right idea! I subscribe to the theory that growth in M3 = inflation rate. M3 has grown around 70-80% during Clinton's tenure, and currently comes to ~11%. Note that this amounts to ~50-60% above GDP expansion over that same period, or 3-4 times economic growth. Conventional wisdom says: market rate - fed's bogus cpi = real interest rate, or 7.75% (prime) - ~1.5% (cpi) = ~6.25%. A very high real rate of interest by "conventional wisdom". The "true" real interest rate = market rate - M3 growth = 7.75% - ~11% = ~ -3.25%. The "true" real rate of interest is, indeed, negative, hence the debt bubble, hence the speculation, hence the "equity mania unprecedented in the history of our Republic." And, actually, the states used to function as a Republic. Another post for another day...

To: PaulM who wrote (31333)	4/8/1999 7:06:00 AM
From: Bobby Yellin	Read Replies (1) \| Respond to of 116798

Hi Paul: whenever I hear inflation numbers these days or productivity etc.. and tight labour ..I just think they mean that the average American hasn't been able to get a salary raise to write home about it.. If the labour market was so very tight for so long..wouldn't one expect a sharp increase in wages? It just reinforces that many of these jobs are on the low end of the pay scale and even when they get percentage increases..the increase is pathetic.. The ballgame has changed now with money flow..It sounds as if the financial types here are making the Japanese market recovery and then possibly the economy there. I am confused as their population is aging and I don't think they have room to let many non Japanese in..so will they have a housing recovery like here etc.. Also I think the peace dividend is dead now here..a lot of US citizens might start approving of their money going to rearmament etc I wonder how many future leaders Sachs is educating now..wonder if the IMF will no longer exist in the 21 century