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Gold/Mining/Energy : Precious and Base Metal Investing
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To: russwinter who wrote (11122)5/19/2003 11:31:36 AM
From: philv  Read Replies (1) of 39344
 
Russ, there is a point where the Fed will be forced to actively and massively support the US dollar in the face of inability to finance (t-bills) or in case of large withdrawls of foreign investment.

At that point the low interest rate environment will be toast. The consequences for the stock markets will be catastrophic unless the public can be convinced that rising rates are an indication of a healthy fast growing economy, rather than a desperate attempt to prop up the dollar. The Fed is no doubt hoping for an economic miracle so that they can raise rates and solve the dollar problem without affecting the equity markets.

The price for the dropping dollar won't be paid or felt until sometime in the future, as importers to the US will try to compensate. Its impossible to know to what extent foreign countries will aid or co-operate to prop up the $US. But wiggle room is slowly being choked off, and the near future will be interesting imho.

Phil
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