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Strategies & Market Trends : Systems, Strategies and Resources for Trading Futures

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To: Patrick Slevin who wrote (7184)	10/26/1998 7:51:00 AM
From: j g cordes	Read Replies (1) of 44573

I said .. will find underlying paper more than sufficient to raise prices. You replied Yes, perhaps. But then what? Artificially boosting prices is more bearish than allowing prices to seek their own level, I think. Central banks have been issuing paper in excess of system need in order to quell market anxieties. Even so, banks and other primary liquidity distributors aren't re-lending the liquidity out into the world. When calm does return to the markets, we'll find the typical course is for the free liquidity to 'inflate' some commodity or other asset class instead of being held in reserves. When that happens (and it will unless central banks can pull off a massive recall which itself would cause problems), something will appreciate dramatically. Its not a matter of artificially boosting prices.. only the fact that the liquidity being pumped into the system to sustain confidence and keep things going will at some point be the fuel for inflation someplace else. When, which assets and where are the watch words... the fuel is already deployed. Jim

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