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Strategies & Market Trends : Currencies and the Global Capital Markets

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To: Henry Volquardsen who wrote (1786)	6/16/1999 3:25:00 PM
From: Freedom Fighter	Read Replies (1) of 3536

Henry, The Beige Book was kind of hawkish so I still think they will raise rates. Second, I think that for a large portion of the middle to late 90s the combination of domestic savings and foreign inflows represented a fairly high percentage of the credit expansion in the non-financial sector. This is why we could grow fast without inflation. We were using hundreds of billions of dollars of foreign savings via the current account deficit and other dollar demand. However, personal savings are now negative and there is some evidence that foreign inflows have slowed down a bit. Yet in 1998 credit exploded. So most of the credit creation is coming from increases in money supply and a lot of that is being directed into stocks (margin is exploding) and real estate (prices are rising in many areas at a rapid clip). It's just a matter of time now until is spills over or causes some other problem. I think "Al" knows that too. If he's responsible (and I question that) he will raise rates. Wayne

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