Monetary growth has been criminal. Money supply figures for the end of 1999 gave an annualised growth of 27 per cent. It beggars belief that anyone could argue in the face of this figure that inflation is a non-problem. No wonder Big Al is looking more and more worried of late. Another error that most of our quantitative-minded economists make is to base part of their argument on consumer spending, arguing that it drives the economy and anything that curbs it will bring on a recession.
Entrepreneurs drive the economy and savings fuel it, even if they are foreign savings.
Consumption is the end of production, not the beginning. Looked at in this light an annualised consumption expenditure of 4.8 per cent for October last year makes for dismal reading. Rather than this expenditure driving the economy, it is being driven by the Fed s loose monetary policy. And Greenspan knows it. Sooner or later, loose money, particularly of this magnitude, will influence imports.