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Politics : Dutch Central Bank Sale Announcement Imminent?
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To: PAUL ROBERTSON who wrote (3553)2/18/1999 11:39:00 PM
From: Hawkmoon  Read Replies (1) of 81999
 
Paul,

Can't say that I disagree with anything you state.

Should the US face increasing domestic pressure for protectionist measures to protect certain industries like steel and manufacturing, then we may well face some serious repercussions.

But the variable that I'm most interested in is whether in the event of a maket correction or the onset of a deflationary recession, bonds will become the safe haven for capital from the equities market.

So long as prices continue to decline, I just can't see the argument for gold, which is traditionally a hedge against inflation, not deflation (which we haven't seen to this extent since 1928-29). But I do see the argument for cash and bonds (and a bear market fund or two like BEARX).

Money flowing out of global equity markets will seek the safest harbor available and the only two options available are the dollar and gold. The apparent risk of Y2K readiness overseas should continue to reflect a measure of capital flight from foreign markets regardless of what the Fed does to maintain stability in the gold and dollar markets.

And we also seem to forget that E-commerce is inherently deflationary since it permits the best pricing comparisons for consumers and murderous competition between vendors and portals vying to maintain their audience and customer base.

A lot of the mid-level distribution network (bricks and mortar establishments) will eventually be reduced or eliminated, with a corresponding reduction of consumer purchasing power by the newly unemployed.

Regards,

Ron
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