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Strategies & Market Trends : Zeev's Turnips - No Politics

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To: ItsAllCyclical who wrote (62120)5/6/2002 1:45:46 PM
From: Lone Ranger  Read Replies (1) of 99280
 
JimL,
Not to beat a dead horse but.... if the dollar continues to decline, that is inflationary. From more expensive imports to costlier overseas vacations, the dollar declining portends badly for benign inflation. How does it play out, I see the Fed holding short term rates low until this economy is back on track, ie corporate profits and cap ex begin to rebound. Once that happens, rates will be raised to try and choke off the inflationary stimulus that eleven rate cuts, ie 40 year historic lows, have caused. This will hopefully halt the slide in the dollar. Probably the damage for inflation long term has been done. I guess the dollar can continue to decline with rising interest rates and inflationary tendencies but the result is not pretty. Stagflation ala Jimmy Carter, bring in Paul Volker, comes to mind. In this scenario, gold continues to rise.
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