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Politics : Ask Michael Burke

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To: Earlie who wrote (75250)	2/5/2000 2:36:00 PM
From: valueminded	Read Replies (2) of 132070

Earlie: Your responce doesnt consider the reality (current) that they (Japan, emerging markets etc) believe they need us more than we need them. Until that belief changes, rate relief will be effective because it will be coordinated with our trading partners. In my opinion, the markets will turn when the american consumer has had his fill and no longer buys with impunity. Why doesnt Japan want a strong yen? (Its because they are not consuming and thus must sell exports overseas (which means US) so they will do whatever it takes to weaken the yen against the dollar. When the US consumer reduces his consumption or our trading partners pick up, I think the dollar gets hit hard. When that happens, there is no reason to support the dollar & we get inflation in our imported goods along with at least a US recession. By allowing rates to exist artificially low, AG is creating the "liquidity trap" whether he knows it or not because he is satiating consumption. (my opinion)

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