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To: Lee who wrote (138151)	7/30/1999 5:27:00 PM
From: BBG	Read Replies (1) \| Respond to of 176387

OTOTOT >>>Amazing that citizens of other countries have a better grasp on the functions of the Fed than some US citizens.<g><<< Lee... I am an American Citizen who happens to live overseas... But Gringo thru and thru... BBG

To: Lee who wrote (138151)	7/31/1999 2:52:00 AM
From: JRI	Read Replies (3) \| Respond to of 176387

Hey Lee, great recap on the Fed, conditions etc...I gladly read your summaries, even if we differ (ever so slightly) on where rates should now be and/or how real is the threat of inflation now... Any comments on my scenario that we will see lower rates (down to 5.50%..maybe even a tick lower) between now and end-of-year, due to (1) Y2K-Greenspan not willing to act before Jan. 1, 2000 (2) Weak recoveries around world (3) "Safety haven" of U.S. Treasuries being bought by panicky foreignors (due to Y2K) (4) "Overreaction" of current corporate bond spreads narrowing....less corporate supply to compete with U.S. gvt. debt as end-of-millenium approaches (5) Some signs (at least to me) that U.S. economy slowing (2.3% GDP, consumer confidence figures lower, etc)..What's your prediction for rates between now and end of year? BTW- Do you think, if I start spreading the word, that the next millenium REALLY doesn't start until January 1, 2001 (true), that this would delay the Y2K Bug until that date <g> Just a thought...

To: Lee who wrote (138151)	7/31/1999 1:58:00 PM
From: Chuzzlewit	Read Replies (2) \| Respond to of 176387

Lee, I am frankly perplexed at the cross-currents in the economy. I believe that interest rates are too high. If you subtract the core rate of inflation from the bond yield you get a real rate of return almost double the historic real rate of return on debt. Clearly, the credit markets are acting as if inflation will resume soon. It seems to me that modest real wage increases are not bad. I don't know what the most recent numbers show, but as I recall (in general terms) US lower and lower-middle class wage earners had not experienced any real growth for some time -- they were economically no better off than they were a decade ago. I think that probably the biggest overhang we have is the national debt, and the Republican tax cut plan, while appealing to me individually, precludes or limits the ability to pay down the debt, while at the same time serving as a stimulus to the economy which would certainly cause the Fed to crank up rates. Reagan's tax cut in 1981 led to a massive increase in the national debt and continuing high interest rates -- despite his predictions. My modest tax proposal would be to raise the standard deduction by $5,000 and eliminate the marriage tax penalty and leave it at that. I have no idea how much this would decrease tax revenues, but it would disproportionately benefit people at the lowest end of the economic totem pole. TTFN, CTC