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Politics : Ask Michael Burke

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To: Don Lloyd who wrote (59053)	5/11/1999 2:02:00 PM
From: Freedom Fighter	Read Replies (1) of 132070

Don, Don't you believe that there are other factors besides interest rates that control international flows? That was part of my point yesterday. I think the size of the current account deficit, savings levels, stock market direction, rate of economic growth, and business return on capital also play a part. I'm not smart enough to quantify any of this, but they are part of the equation. If the Fed was to raise interest rates at home right now, it would slow the economy and perhaps burst the stock market bubble. So initially the interest rate differential "might" attract capital, but as soon as the economy slowed or stocks starting falling rapidly it could more than reverse and set in place the conditions needed to reverse the current account deficit and lower rates again. NO?? Wayne

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