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Non-Tech : Invest / LTD
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To: The Ox who wrote (5445)11/18/1998 2:28:00 AM
From: R. Gates  Read Replies (2) of 14427
 
The Fed knows that DEFLATION is the biggest threat right now and the Bottom Line is: Rate cut won't stimulate DEMAND. That's what ails the world, and the rate cut just shows that the cost of money has gotten much cheaper than it was a year ago because of NO DEMAND. This is DEFLATION, and rate cuts will actually fuel the downward spiral as the whole world figures out that the dollar is NOT the place to be. As the dollar falls, the U.S. stock market will as well and Gold will shine. Gold will be a safe haven for a while, as countries dump the dollar.

As long as there's still a lot "dumb money" out there buying some of the internet crap at 200 times projected earnings for 3 years from now, you know that we haven't come close to seeing a real decline yet in stocks. The little dip to 7400 was just the first little tremor of the real financial earthquake that will shake Wallstreet and Mainstreet. Look for signs of DEFLATION. The Fed cutting rates is just one of more than a dozen that are out there. FWIW, this is the 4th month in a row that the average price of a new home in the Denver area has fallen, EVEN with falling interest rates. DEFLATION. Denver has been one of the hottest real estate markets in the country for the last 4 years. Stock markets do NOT go up in deflationary times...quite the contrary...

R. Gates
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