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To: Alex who wrote (34059)	5/17/1999 6:57:00 PM
From: John Hunt	Read Replies (1) \| Respond to of 116764

Comments by Paul Volker << I'd like to share portions of a story from Reuters, which covered a speech that Paul Volker made Friday at a Credit Suisse-First Boston Conference on mergers and acquisitions. Reuters quoted Volker as saying that, "If we had a pretty good recovery in the rest of the world, inflation concerns would rise. And we had some concern this morning." (Remember that these quotes came on Friday). The article continued: "Volker acknowledged that the U.S. economy had changed largely due to technology that has increased U.S. productivity. This has allowed U.S. corporations to boost output and profits without inflationary price hikes. 'This expansion has violated everything I know about the economy,' Volker said of the second-longest expansion on record, in which the economy has grown at a robust clip while inflation has stayed tame. 'Part of the explanation is we are doing so well because the rest of the world is doing so poorly...inflation has been so good because commodity prices are depressed and everyone else has excess capacity utilization,' the former Fed chief said." I certainly know how Paul Volker feels when he talks about the fact that the expansion has violated everything he knows about the economy. But what follows is the most important thing he said, and regular readers of the Rap should know that this is exactly what I believe, since I've harped about this many times: "The fate of the world economy is now totally dependent on the growth of the U.S. economy, which is dependent on the stock market, whose growth is dependent on about 50 stocks, half of which have never reported any earnings," Volker said. That is a very potent statement from a man who, in my opinion, gets complete credit for slaying the inflation of the late '70s and setting the stage for all the things that Greenspan has subsequently mismanaged. I think Volker is one of the last true central bankers and I value his comments very highly. I recommend that folks read those quotes a few times and make sure that they sink in. >> Market Rap with Bill Fleckenstein stocksite.com