--- Begin Message ---
"William F. Hummel" wrote:
> Henry Liu wrote:
>
> >One way to look at interest rate is that it is essentially a private tax
> >levied by lenders. Throughout history, any real interest rate above 3% is
> >usury. When the Fed raises the FFR toward 7% while overall inflation rate is
> >still at 1% (and some sectors such as farm prices, are actually experiencing
> >deflation), the Fed is practising usury on behalf on the owners of capital.
> >
> If the inflation rate were indeed still at 1%, an FFR approaching
> 7% would clearly be excessive. On the other hand with the actual
> inflation rate about 3% and apparently growing, what should the
> Fed do?
>
> William F Hummel
Greenspan hemself acknowledged that the conventional measurement on inflation is
inaccurate with bias on the highside. He has said so on Humphrey-Hawkins
testimonies more than once. It is very debatable that US inflation rate has been
3%. What Greenspan claims that he ANTICIPATES it to reach 3%. He is fighting
phantom inflation. Most central banks in the world think a 3% FFR (or its
equivalent in other countries) is quite adequate. There is no redeemong social
value in a high FFR.
Inflation is one of the most misunderstood and politicized indexes in economics.
While I am not technically competetent to devise a new measurement, it is not
difficult to oberve that in some weak sectors such as farming, deflation is he
problem.
--- End Message ---