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Strategies & Market Trends : Currencies and the Global Capital Markets

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To: Hawkmoon who wrote (2636)	12/21/2000 9:12:50 AM
From: Robert Douglas	Read Replies (1) of 3536

And guess what will happen should AG juice the economy to the other extreme with a series of emergency rate drops... Two comments Ron: First, it usually takes 6 to 9 months for monetary action to kick in. Second, there is ample reason to believe that reductions in rates may not be very stimulative to the economy. The United States has been a huge and disproportionate part of the demand driver the last 3 years. At this time, there really isn't any country, or countries, that can make up for the lost demand that will happen as the US economy weakens. Therefore, I believe that we will see rates drop around the world and even more sharply than the markets are discounting at present. To really get the US economy back might take some seriously low interest rates and a nice tax cut. That's why I'm sticking with my long Eurodollar positions even though they have built in a few rate cuts already.

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