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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: Perspective who wrote (232132)3/29/2003 2:01:35 PM
From: Joan Osland Graffius  Read Replies (1) of 436258
 
bobcor,

Thanks for your thoughtful response on inflation and deflation.

>>However, when rates hit zero, the debt creation game ends.

We recently read that Japan is offering negative 2% interest rates. I am thinking out loud here and wondering if zero interest rates and anything below zero have the same results.

>>The Fed has nearly complete control over the yardstick called the dollar here - if they want it devalued so that debtors loads look smaller, they can certainly do that.

Will the rest of the worlds central bankers put up with our Fed devaluing at will? There has to be some point where they will devalue in lock step along with the US dollar.

>>Park our purchasing power in stable currencies that *are* stores of value. Some in the Euro, some in gold, maybe just hard, non-leveraged assets.

You are right on. With the US dollars plunge recently their has been some movement of US dollar assets to other currencies. I do not see the masses in the US buying assets denominated in stable currencies - yet.

For your information Merrill Lynch just this week merged the only global debt fund they offered. They sold the foreign debt and rolled it into a US debt fund. The global debt fund was one of their best performing debt fund in 2002 and 2003. <g>
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