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

To: Knighty Tin who wrote (58094)	4/29/1999 12:54:00 PM
From: Tommaso	Respond to of 132070

Well, of course that is correct. But there does come a point where banks reach to absolute limit (loose as it may be) of what the law allows. Then if the deposits backing that shrink, you have the inverse multiplier effect--the prospect of which so spooked Greenspan last fall. I find it very hard to keep various economic factors in mind simultaneously, because everything is always reacting on something else. Causes become effects and effects causes. But I have no doubts that money and credit have been far to easy to obtain, and that this has led to foolish economic behavior. I don't think we will ever have bank panics again--or if they occur they will be transient and won't result in depositors being frozen out very long from their cash. But even a temporary problem would (I think) have a huge effect on securities markets. I am old enough to remember going to my credit union to get some money out (this was in the late 1960s) and being told blandly, "We don't have any money today." I wasn't borrowing; I wanted some money from my savings account to pay for a weekend trip. This caused a sense of great uneasiness. All we need is for malaise to supplant euphoria.