Blistering U.S. Growth Worries IMF : LUSENET : TimeBomb 2000 (Y2000) : One Thread

Saturday January 29 2:29 PM ET Blistering U.S. Growth Worries IMF By Knut Engelmann

DAVOS, Switzerland (Reuters) - The United States needs to tame blistering growth and raise interest rates soon to prevent the world's top economy from overheating, a senior International Monetary Fund official said on Saturday.

Stanley Fischer, the fund's first deputy managing director, said he was confident the U.S. Federal Reserve would confirm expectations in world financial markets and raise short-term interest rates when its policy-making council meets next week.

Nothing less than the future of the entire world economy depended on U.S. policy-makers, he told a news briefing at the World Economic Forum's annual meeting, an exclusive get-together of the world's movers and shakers in the Swiss Alps.

Asked what was his main concern for the world's near-term economic outlook, Fischer said: ``A lot will depend in the short run on how the United States handles its excessively rapid growth and possibly rising inflation.''

But he added: ``If that is handled with the skill that the Fed has shown it is capable of in past years, then I expect we will have continued and rising world growth.''

Fed policymakers meet on February 1 and 2 and are widely expected to bump up the key Fed funds overnight bank lending rate by a quarter percentage point to 5.75 percent just as the U.S. economy enters a record 107th month of unbroken expansion.

On Friday, the U.S. government said the economy grew by a red-hot 5.8 percent, the briskest pace of increase in a year, driven by strong consumer spending and businesses building up inventories.

Fed officials have long worried that such strong growth, coupled with the tightest labor market conditions in a generation, will eventually push up wages and prices.

They nudged up borrowing costs three times last year, but those moves have had little impact yet on strong U.S. demand.

``The Fed has been signaling a rate increase next week,'' Fischer said. ``The inflation pick-up suggests that will happen.''

New Economy, Old Laws

U.S. Treasury Secretary Lawrence Summers, arriving in Davos with President Clinton, said the U.S. economy was in good shape but warned investors not to get carried away.

``In many ways we have a new economy in the United States,'' he said. ``But it is a very serious mistake to overinterpret that relationship. The laws of economics have not been repealed, much less those of human psychology.''

Summers also said that the nation's low savings rate continued to be a dark spot in an otherwise bright picture.

``For the new economy to succeed, it must be built on old virtues,'' he said. ``Our national savings rate is still far too low, driven by a personal savings rate that is not where it should be.''

Summers added that the high and rising U.S. trade deficit was ``a real concern'' and could eventually pose a threat to economic growth. He reiterated long-standing demands for Europe and Japan to boost their own economies, thus helping to increase demand for U.S. exports.

At last week's meeting of finance ministers and central bankers from the world's seven major industrial nations, the United States won high praise for its economic boom and historically still-low inflation. But the group also expressed concern about the low U.S. savings rate.

The mere fact that such less-than-glowing language on the U.S. economy was included in the G7 statement pleased some of Washington's European partners who have complained about what they see as a persistent U.S. tendency to lecture the rest of the world.

``It is important that each of our countries, including the United States, have some structural problems to solve,'' French Finance Minister Christian Sautter told the Davos meeting. ``We have to work in each of our countries.''

-- Lynn Ratcliffe (, January 29, 2000


With the Left hand he wants to slow down US growth (read Wall Street) and with the Right he wants to maintain World Growth (read Wall Street). They are gonna HAVE to decide.


(THough this COULD be a call for Greenspan to raise by 50 basis points to get an effect)

-- Chuck, a night driver (, January 29, 2000.

Gag on all those words from the meeting's attendees..

Since Mr Greasepalm's "money" is infinite in nature he seems to have only two tools at his disposal.

1. interest rates

2. his public dialogue

The power of these tools appears pretty awesome so far... the masses are predictable as long as their standard of living does not fall too far too fast.

-- Will (, January 30, 2000.

Chuck: do you really think Greenspan will push for a 50 basis point increase? The market has dropped, what, 7 percent in the last week or so on the expectation of a 25-point hike. And he has a (recent) history of working in 25-point increments up and down. If he goes for a full 50-point hike, it's a whole new ball game, of the hardball variety. Playing politics, maybe? If the market tanks before the elections, I'd say Gore has even less of a chance of winning than he has now. But then, I'm sure greenspan is already looking ahead to his next new boss, now that he has a new term appointment safely under his belt.

-- Cash (, January 30, 2000.

Do you want an effect? I will vote for any presidential candidate who, while sober, will say he/she will:1) Abolish the income tax; 2) Repudiate the national debt; 3)Abolish the Federal Reserve and place the "power to coin money and fix the value thereof..." with Congress, as the forgotten Constitution says; and 4)Abolish userous interest rates (anything over a mutually agreed upon rate between the House and the Senate, which, hopefully, will be around 1.5% above Prime, for example. Of course, I realize that any candidate that espouses such a program will be assassinated. Such, indeed, are the fortunes of war.

-- Bob (bmoss3@Prodigy.Net), January 30, 2000.

Cash, do you think that Greasepalm really does take orders from the president?

Good one Bob.

-- Will (, January 30, 2000.

Is it socialism that prompts Christian Sautter to make such absurd remarks? "We have problems, so you should too". Wisdom like that I can get from my eleven year old sons! Weird.

-- Gia (, January 30, 2000.

Thanks Will - I hope that my contribution is positive - I have been away for a couple of days - Has the price of oil per barrel stabilized? If so, what is the amount?

-- Bob (bmoss3@Prodigy. Net), January 30, 2000.

Will: Greenspan taking orders from a Prez? LOL. I think it's more likely the other way around. I do think that Greenspan is already looking ahead to the next presidency and how his actions or inactions can influence both the election and his own status after next January. I also think he's looking for a way to 1.) avoid blame for the inevitable fall that's ahead, and 2.) solidify his position with Clinton's successor so he can weather any blame/criticism that does spread toward him.

-- Cash (, January 30, 2000.


I think you "nailed it" in your last two sentences. I agree. It's happened every time before, right?

-- Larry (Rampon@Dallas.Net), January 30, 2000.

Is it possible that this message board really thinks that all the information coming from the families who own the Federal Reserve is anything but propaganda of the sort that Goebbels used. To truly read what these people are doing read the book Empower the People by Tony Brown. Or My Awakening by David Duke. Both these books are not published by the infomachine. Since 1945 all books, TV, Radio except a few A.M. radio stations and soon the internet have been written or produced with an agenda in mind. This will be more apparent than ever to most of the western world. The Panama Canal is now controled on both ends by new masters. Have you ever wondered why no media is allowed in these two Zones???. Could it be the same reason no media was allowed within three miles of Waco. The experiments on the kids inside of Waco was just a beginning. The troops pouring into Panama right now aren't coming for a picnic. What would it be like if a small red mercury bomb went off in the middle of downtown Detroit or Atlanta and in the morning Clinton News Network was showing all of the destruction caused by White Racist. Just as they tore our nation apart in 1861 so again you will see the true agenda of the Luceferians who do not pray to Jehovah.

-- Concentration Camp #245602 (, January 30, 2000.

The second thing the IMF should worry about is the US heading into a recession and dragging the known world into a spiralling economic qaugmire.

-- Squid (, January 30, 2000.

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