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Gold/Mining/Energy : Gold Price Monitor

GDXJ 101.44

+3.5%

Nov 12 4:00 PM EST

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To: Abner Hosmer who wrote (5574)	1/10/1998 4:35:00 PM
From: philv	Read Replies (2) of 116756

Thomas Becker: Re: Japanese excessive liquidity Japan is being counselled to further inflate their domestic market. Clearly, as you have stated, their bank rate is .5%, and lowering of interest rates is no longer possible unless they start to pay borrowers! So Japan has lowered income taxes, to try to get their consumers to spend more yen. Their options are limited, but what they can do is print money by increasing debt. But the problem with that is there is altogher far too much debt already. It is the debt that is precipitating the Asian crisis. Debt that was brought on by governments and their Central Banks monetary and fiscal policy, which their corporations eagerly embrassed. Japan has paid a big price for their previous unrealistic economic expansion, and the other countries in the region are now paying that price as well. Equity markets have tanked, and their currencies devalued. Currency devaluations and lowering interest rates are both inflationary moves to try to counteract the obvious massive deflation which is occuring. These can work provided that other economies (US and Europe) do not also become affected and embark on the same path. The result would be competitive deflations and a world-wide depression. Japan is not without means due to their emmense holding of foreign reserves. It will be interesting to see if they are forced to liquidate some of these, and what effect that will have on the U.S. I nominate the C.B. and IMF jugglers with a GOLD medal if they can keep this thing going for another year without dropping the can! Phil

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