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Strategies & Market Trends : Currencies and the Global Capital Markets
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To: Robert Douglas who wrote (2991)2/12/2001 9:45:08 AM
From: Lee  Read Replies (1) of 3536
 
Robert,

I agree that the Fed should continue to lower rates now. The reductions to date reflect more a drop in inflationary expectations than a reduction in the real rate. Indeed, some consumers are already postponing purchases in anticipation of lower future prices for certain goods. So we have an environment where investments and consumption by corporations and individuals is less. Any improvements in the current account reflects this, rather than an economy improving in health. In addition, we have an economy where individuals need to increase their rate of savings. The Fed is trying to increase liquidity in a difficult head wind. One of the benefits of a rate reduction is it will stimulate globally as other countries may follow suit. This should increase consumption of US goods.

In addition we need a tax cut. A tax cut will help to improve the balance sheet of US consumers.

Regards,
Lee
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