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Technology Stocks : Cymer (CYMI)
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To: mike who wrote (6841)10/27/1997 7:03:00 PM
From: D.J.Smyth  Read Replies (2) of 25960
 
mike << the reason governments are selling
gold is to support their economies. governments dont sell gold when their expecting
inflation and the price to increase, their expecting deflation.>>
Switzerland stated that the reason they were selling their gold was to help stabilize currencies, not to hedge their economy which by every measure is doing very well.

it is not logical to have both (a) deflation and (b) rising interest rates. your comments state that (a) Japan will start selling US bonds thus causing our rates to rise in anticipation of funding increased demand and then you state (b) this will cause deflation.

Interest rates rise more in anticipation of overheating economies. In Hong Kong, the rates were artifically raised to stem the threat of devalued currency brought on by inept policy makers in China (to help thwart short traders against Hong Kong currencies).

Why would Japan sell U.S. treasuries which is paying 6%+ while the dollar remains strong against the Yen? No way! As deflation hits Japan, the yen becomes of less value, so borrowing power against the U.S. Treasuries increases. Japan won't sell an increasing investment they will BORROW AGAINST this increasing investment to fund any "at home" problems. If you can borrow money at 2% in Japan and make 8% in the U.S. relative to interest rate plus currency exchange rate differential, you borrow as you are net plus 6%!

i cleary don't understand your reasoning.
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