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To: DeaconBenjamin
As I comment frequently, Greenspan is in deep trouble. A one-trick pony, his only control is/was to turn the Fed interest rate down. He has been doing this for a decade or so, to the point where the knob is nearing zero.

A negative fed rate would be amusing but hardly possible.

So he is out of control authority, and he seems to know it.

In other words, the only way anyone can turn the 'knob' is UP, i.e., increasing interest rates. This amounts to deliberately trying to start an inflationary period because they've been deflating so hard there's nowhere else to go.

--Boris

26 posted on 05/25/2003 7:35:19 PM PDT by boris (Education is always painful; pain is always educational)
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To: boris
Oh, Greebean's in trouble all right, but your charactisation of him as a financial 1-trick pony is inaccurate. The Fed -- any day it likes -- can start buying back Treasury securities of various maturities, thus increasing the 'actual' money supply.

Add a trillion in liquidity over, say, 6 months' time, and watch what happens.

Boris, old boy, it's intellectually that Greenbean is a 1-trick pony. Throughout his career, only inflation was a menace.

Not that deflation is a menace now (or, at least, not to the US economy). First, there isn't any. Second, Japan's pernicious deflation was started, and continued, and will continue for the foreseeable future until such time as Koziumi or one of his successors ORDERS the liquidation of failing companies and institutions.

Unpopular, sure, and dipsticks want nothing more than to be re-elected. The US had its own situation like Japan's, once. The SecTreas of the day told the President and the Fed chairman to '...liquidate. Liquidate debt, and capital, and labour, and farms. But above all, liquidate debt'.

The President who ignored this explicit advice was, of course, Hoover. Then the second Roosevelt came along and tried to inflate his way out of deflation. Politics aside, never mind left, right, or center, this can never work ... indeed, the worldwide record of this dubious policy is consistent in one point only -- its utter failure.

39 posted on 05/25/2003 9:08:47 PM PDT by SAJ
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To: boris
They can inflate the currency by simply printing it...
56 posted on 05/26/2003 12:39:17 AM PDT by DB (©)
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