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Gold/Mining/Energy : Gold Price Monitor

GDXJ 121.59

+2.2%

Dec 26 4:00 PM EST

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To: goldsnow who wrote (2712)	11/1/1997 11:29:00 AM
From: Zeuspaul	Read Replies (3) of 116830

More on deflation from Business Week Online businessweek.com for complete story >>What's worrisome for the rest of the global economy is how deflationary pressure can spread. The country immediately at risk is Japan, which has been flirting with serious deflation throughout the 1990s as huge real estate and stock market losses crippled its financial system. Now, it is in danger of being sucked into a deflationary maelstrom, as it tries to compete in Southeast Asia where it does 40% of its business. At the moment, the U.S. doesn't face the same risk. The difference between mild price declines and runaway deflation is largely determined by the state of an economy's financial system. ''Deflation only creates a problem if balance sheets of financial and nonfinancial firms are already in a weakened state,'' says Frederick S. Mishkin, a former New York Fed economist who teaches at Columbia Business School. The U.S., in other words, is well-placed to weather, and even benefit from, a deflationary trend. Most corporations have strong balance sheets and have refinanced borrowing at low interest rates. And while consumers have added debt, they should have no trouble paying it off as long as the job market stays strong (page 60).<<

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