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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: Mike M2 who wrote (54269)1/5/2001 9:13:21 AM
From: flyboy  Read Replies (2) of 436258
 
I am firmly in your camp now that a flood to liquidity that we are now getting with the symbolic 25 basis point cut last night is BAD...I did not foresee such action thus may have left some considerable money on the table with the Euro, we shall see...I fear that the dilutive effects will put pressure on the world economy in general...The crash of the dollar while more possible is still very unlikely...Maybe doom and gloom is the appropriate mantra indeed...Economics 101 suggests though that to cut the $1.3Trillion from the Federal drain on the economy will provide stimulus to the private sector...The private sector has recently proven too be far less constrained than the past thus leaving the possibility of a debt crisis if left alone...Will it cause inflation???Will this cause Stagflation???

IMO the reason that we have not had inflation is primarily the strength of the dollar...I do think that there is some benefit from productivity returns but as the dollar's value has soared the real buying power of Americans has boosted without a domestic inflation result...Is this too your position???

The fall of the dollar would be disastrous on a global level because the consumers in the US provide for such a large percentage of consumption, and the commodity prices that are tied to the dollar...Is this your belief???

If so...maybe you are right, hope not.

Thanks for the link...
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