[OPE-L:6120] Re: Re: Re: Re: possible ways out of the 'crisis'?

From: Patrick L. Mason (pmason@garnet.acns.fsu.edu)
Date: Wed Oct 31 2001 - 14:41:26 EST


Note that the end of my last posting also stated that huge federal deficits 
are necessary along with lower interest rates. I would also through into 
the mix tax cuts for the low and moderate income households. Other options 
may also be necessary.

peace, patrick

At 10:03 AM 10/31/01 -0800, you wrote:

>patrick wrote:
> >. In part, the Fed initially raised interest rates to squeeze out
> > stock market speculation, to bring price-earnings ratios back in line with
> > historical averages.
>yes but haven't P/E ratios risen even farther vis a vis historical averages?
>doesn't this suggest that the primary effect of the rate reductions has 
>been to
>finance an asset inflation. Perhaps through second mortgages to buy into what
>was believed to be the bottom of the market?
>So, I don't think Greenspan et al. are particularly
> > distressed about the current level of stock indices even if they are
> > carefully watching the direction of movement.
>shouldn't he be distressed by the current P/E ratios?
> >
> > If lowering interest rates is futile, do you prefer rising interest rates?
> > Constant nominal rates with declining inflation - in which case we get
> > higher real interest rates?
>All of these options may not point a way out.

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