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Gold/Mining/Energy : GOLD-XAU
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To: Richnorth who wrote (150)11/22/1997 11:30:00 PM
From: paul ross  Read Replies (2) of 1756
 
Follow this line of reasoning and I invite comments (maybe not a TB attack).
To bail out its ailing banks the Japanese govt. comes to the rescue and in effect prints a whole bunch of money . This puts downward pressure on the Yen, with the Y/D going towards 150. The US, facing a lot cheaper Yen and a real lot cheaper other Aisan currencies, does what in response? Does it inflate too. US products, including its debt, become very expensive for Aisan buyers and US trade deficit soars.
This whole crises is about a liquidation of debt. And the easiest way to pay for the mistakes of the bankers is to take a little out of everyones pocket
debasing the currency.
Maybe the pressure by the backers of the ECU and the future Aisan currency unit have put too much pressure on govts. to lower their inflation rate too quickly. This has caused a world disinflationary (deflationary) environment, with little way for over spending govts. and over lending banks to adjust so rapidly to this change.
After all a debtors best friend is a fixed loan rate in an inflationary environment. In effect, the patient is getting severe withdrawal symptoms, he just needs a larger dose of drugs (more
money supply).
Let me say I subscribe to the von Mises and Austrian school of economic thought, that the best way to resolve such a crises is for the govt. to get out of the way and to let the chips fall where they may.Inflation just forestalls the inevitable.
PR
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