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To: Jon Koplik who wrote (30337)	5/19/1999 1:02:00 PM
From: Art Bechhoefer	Respond to of 152472

Jon, very perceptive analysis. I would only add that the Fed seems to focus too much on domestic measures and not enough on worldwide conditions. We are all part of a world economy, thanks in part to very rapid transmission of information and very uninhibited flows of capital, products, and services between most countries. Thus, when we have a very modest, non-inflationary utilization rate at a time when many of our companies are showing strong growth (and their stock prices soar as a result), the reason is that the companies are able to choose the best spots worldwide for production and are able to sell products to customers worldwide - more so now than ever before. The point is that we can have high growth WITHOUT inflation precisely because we have these uninhibited flows of capital, products and services. That's why when the Fed states that they ought to be more sensitive to inflation, they're just simply out of it.