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What does your assertion that the Fed may have caused to the bubble have to
do with the fact that they had bad policies that made the Depression worse?
Ballen stated that the Fed's restrictive policies made things worse. Do you
agree or disagree with that?
Kent
----- Original Message -----
From: "Charles Meyer" <chaze@xxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Sunday, September 22, 2002 10:05 AM
Subject: Re: [RT] From this week's Barron's:
Everyone has been brainwashed to believe that one of the reasons 1929
occurred was
because of poor judgment on the part of the FED re restrictive money. While
a case can be made
that monetary policy was restrictive; a logical case can also be made that
it was also the FED's
easy money policies that led to the Great Depression in the first instance.
Surely there were
other contributing factors; but everybody has bought into the idea that the
FED is all knowing
and can do no wrong.
chas
----- Original Message -----
From: Daniel Goncharoff <thegonch@xxxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Sunday, September 22, 2002 8:55 AM
Subject: [RT] From this week's Barron's:
> From An Interview With John Ballen:
>
> Q: Layoffs are still a concern. Industrial production is down. Pricing
> power is scarce. So is the economy really improving?
> A: The unemployment number came down in the most recent time frame. The
> indicators do suggest the economy is improving, maybe not at a rapid
> rate, but definitely improving. The people with negative outlooks refer
> to two time periods, 1929 and Japan since 1989. Japan isn't a fair
> analogy at all. They never readjusted their economy, and they continue
> to invest in companies that don't have sound fundamentals. The
> equivalent would be if we kept investing in Internet companies with
> skyhigh valuations. In that case, we would have poor earnings growth for
> the next 15 years like Japan. Instead, many Internet companies with bad
> business models have gone bankrupt, and capital is going into companies
> that have sound business models and provide a return on investment. That
> isn't at all like Japan.
>
> The environment today is also a lot different from 1929, when monetary
> policy was so restrictive. There were fundamental problems with the
> economy and the monetary system in 1929 that we just don't have today.
>
> Q: Where do you see interest rates headed?
> A: If the economy improves, interest rates are probably at some sort of
> low point. Still, there's no inflation out there. And if you look at
> long-term interest rates over the past several hundred years in the
> U.S., 4% or 5% isn't unusual for long periods. If the economy improves,
> you might see an uptick in rates, especially on the short end as a
> psychological response, but there's no real reason why interest rates
> should get out of control or disrupt the stock market. Certainly, if
> rates rise, the stock market looks less attractive. But, on the other
> hand, if rates rise that would also indicate earnings are improving, and
> that wouldn't be such a bad thing.
>
>
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>
>
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>
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