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Technology Stocks : Intel Corporation (INTC)

INTC 36.78

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3:59 PM EST

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To: JDN who wrote (103133)	5/4/2000 12:53:00 PM
From: Joe NYC	Read Replies (1) of 186894

But, if I am not mistaken we also CURRENTLY have the highest interest rate also. Do you think the bond holders would accept negative real interest rates? Medium and long term market interest rates are a function of mainly inflation - the higher the inflation, the higher your mortgage rate will be. The interest rates (the shortest term interest rates are one of few tools available to Fed to bring down the inflation. So the sequence, if things work out as planned is: + Fed increases the short term rate, use other tools to control moeny supply. + the inflation (on consumer and producer level) goes down over time. + the lower inflation lowers long term rates + when inflation is low enough, the Fed can reduce the short term interest rates Who's to say it isnt the INTEREST rates creating the inflation?? Just about everyone who passed Economics 101 Also, I might point out, to my knowledge, I think we presently have the highest productivity levels also. Increasing productivity, if anything, would work to reduce inflation. I don't think the absolute level of productivity has any material influence on the level of inflation. Joe

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