<<The Alan Greenspan/Paul Krugman explanation seems to be
very Keynesian: human irrationality took over. This doesn't explain
anything. Why did irrationality take over then and not sooner or later?
Instead, the answer lies in the inflationary and regulatory policies
pursued during that period. >>
Many economists would indicate that the entire marketplace is wracked by
irrationality; irrational exuberence, irrational pessimism, irrational greed,
ad naseum. What I seem to recall from the last 18 months, is the beliefs that
the economic goodtimes were over (in part) because of the OPEC creeps,
jacking up prices. Whether this is true, is open to question.
I would claim the mere perception of such an occurence, was enough to pop the
dot.com bubble. Remember, that Greenspan was using the post WW2 German model
that inflation causes recession/depression and that low inflation was the
target-goal. The method was to use minetary policy to prevent the typical
'business cycle' to close, and thus, perpetuate the prosperity that we
experienced during most of the 1990's. My Comment: Clinton was a liar and a
whoredog, but he was wise enough not to screw up a good thing, with Greenspan
doing German-style banking policy.
Further comment: German style anti-inflationary policy, in order to ensure a
prosperity, does not work when the cause of inflation in outside of banking
control. What is outside of banking control? The OPEC bastards, or more
formally, the Wahabbis. My sense is that the dot.com bomb, combined with the
foolishness of government policy in California, helped jack up the price of
domestic natural gas costs. Remember that?
The economy was deflating during 2000, and all the interest-rate cuts have
done squat (although iy supposedly takes at least 12 mos for the interest
rate cuts to generate a response). 9-11 transformed the economy from a weak
one, into a recessionary one. Which points up the need to develop an
alternative to petroleum.
This archive was generated by hypermail 2b30 : Sat May 11 2002 - 17:44:29 MDT