Winter in the Great White North Message Board

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Strategies & Market Trends : Winter in the Great White North

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To: Cogito Ergo Sum who wrote (6185)	3/10/2005 7:11:45 PM
From: teevee	Read Replies (1) of 8273

why do higher rates lead to hyperinflation ? actually they MAY be a harbinger of hyperinflation if increased interest rates don't keep inflows of capital at sufficient levels. Interest rates are the only way to either maintain foreign countries buying US treasury bonds (to continue financing the deficit) or to keep money from leaving the country if there is a domestic loss of confidence. Even so, higher interest rates are only a stop gap measure until deficit spending is brought under control. If deficits continue to grow, a currency crisis could rapidly develop. Japan and Korea are the first two countries to publicly fire warning shots accross the bow. The economic ascendancy of the Asian tigers is a big problem for US economic, foreign and domestic policy.

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