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Strategies & Market Trends : New US Economy Policy
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To: Arthur Tang who wrote (19)4/4/1997 10:47:00 AM
From: Arthur Tang   of 435
 
The new economy and the FEDS

FEDS raised the interest rates and Wall street took the chance to tank and buy back all the borrowed stock. Will Wall street succeed? Not with our 401k, some will say. But the volume is not as high, so the buy back will have limited success at best.

Will FEDS succeed to tame inflation? Automobile plants closed for a week, because they can not sell cars without incentives. Numerous announcements of failing to meet earnings projections, coming in all March before FEDS took the action. Things will really get tough when Greenspan has to prove his preemptive action, which is without cause. This year by 4 year cycle is a recession year. People strive to keep the economy going and FEDS think they have to trash the economy.

When overnight discount rate goes up. The ones got hurt are only the banks who borrowed from FEDS. The banks are caught with every day borrowings, not like you and I. WE can shop around and find banks in Japan, Germany, and Canada; who have been lending at 6.5%or lower, and keeping US banks loaning out at competative rates. Prime rate of 8.25 plus 3% is for really bad credit borrowers in the US.

When we borrowed from foreign banks; what control of inflation or our demise does FEDS have. We have bypassed FEDS. FEDS monetary policy will be weakened forever; and only punishes their member banks for crimes, these banks did not commit.
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