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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Jim S who wrote (36422)	7/3/1999 4:37:00 PM
From: Zeev Hed	Read Replies (1) \| Respond to of 116759

Jim, you are almost there, except that the currency in each economy (and not in other countries' economies) should grow at the same rate as its GDP, if that were to happen, then all currencies would have an exact and unique exchange rate. The three "major currencies" (Dollar, Euro and Yen), can actually grow somewhat faster than their respective national economies, but this is because of a current quirk in the world economies, where a lot of "underground economies" are in dollar and other hard currencies denominated transaction, and in the same countries, because of lack of faith in domestic currencies, dollar and other hard currencies are being hoarded, in essence providing very cheap loans the the countries having hard currencies. Typically, in an ideal world, there should a balance between monetary and fiscal policies, but the world is not ideal, and some countries go on printing binges, while others go on soaking money from the economy, that is one of the many causes that we have cycles, IMHO. In the US, right now, when running budget surpluses, we are actually soaking money from the economy (the government is taking in about $100 B more than it is spending in the economy), if these surpluses get out of hand (and I would say that if they reach much more than about 3% of GDP, it might be out of hand), then we might precipitate a recession or even worth (strangely enough the major big economic contractions in our country were preceded by few years of budget surpluses, a strange coincidence). Zeev