Jude, in despair

[Brad DeLong]

>[Poor Jude; Alan isn't listening.]
>
>Polyconomics' Daily Memo on the Margin
>(commentary taken from http://www.polyconomics.com)
>March 14, 2001
>
>"NO REASON TO HOLD EQUITIES"
>
>At our client conference last weekend in Palm Beach, I made this 
>statement to emphasize as clearly as I could the severe nature of 
>the economic forces bearing down on the equity markets. Unless and 
>until the Federal Reserve changes its operating mechanisms in a way 
>that will cause the price of gold to rise at least above $300, I 
>said we cannot expect a meaningful turnaround on Wall Street. The 
>fact that we have had a three-day rally on Wall Street is of little 
>consequence, except to remind us that there are positive forces 
>trying to lift the markets, and that we will have a succession of 
>mini-rallies as the secular bear market moves forward. Look at the 
>graph showing the Dow Jones Industrial average and the NASDAQ during 
>the last monetary deflation: In September 1980, gold was at $620, 
>but began to slide as the demand for liquidity rose in anticipation 
>of a Reagan win and the Reagan tax cuts. The market slid to August 
>1982 when Mexico's insolvency forced Fed Chairman Paul Volcker to 
>flood the banking system with liquidity. Over that stretch, the 
>graph shows mini-rallies that peter out, as the phased-in Reagan tax 
>cuts are overwhelmed by the need for prices and wages to adjust to 
>the smaller money stock.

But inflation was about ten percent per year in 1980! The money stock 
was growing at 10% per year! Wages and prices were going up, not down!

Do you think this guy passes the Turing Test? Is there actually a 
*mind* in there somewhere?

Brad DeLong
-- 
-----------------------------------
Professor J. Bradford DeLong
Department of Economics, U.C. Berkeley
Berkeley, CA 94720-3880
delong at econ.berkeley.edu
http://www.j-bradford-delong.net/
-----------------------------------
"In one way only can we influence these hidden currents-by setting in 
motion those forces of instruction and imagination which change 
opinion. The assertion of truth, the unveiling of illusion, the 
dissipation of hate, the enlargement and instruction of men's hearts 
and minds, must be our means..."

					--John Maynard Keynes