Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Bobby Yellin who wrote (42180)	10/5/1999 5:25:00 PM
From: Henry Volquardsen	Read Replies (1) \| Respond to of 116760

Hi Bobby, I think the odds are slightly higher than 50% that they tighten at the next meeting. The announcement of a tightening bias puts the market on notice and if they don't follow through it begins to lose its power. And unless we have a disaster I think we will see a tightening by the first meeting in 2000. I was out all day so I didn't see L.K. (Kudlow?) on CNBC. What was he going on about? I thought the Fed should tighten because I believe there is a real danger of the economy overheating. Housing prices have been rising too quickly and there are wage pressures building. We could start seeing a return of inflation at some stage. I favor a model that treats inflation/deflation as a long term cyclical item. Trends tend to be reenforced by recent experience in excess of what the math would call for and this makes them difficult to arrest once underway. I think of it as having a very high emotional content. This tends to mask underlying changes and makes it difficult to spot trend changes. We have experienced close to twenty years of declining price pressures and there are still a number of underlying structural factors that support this. However I think we are dangerously close to taking low inflation for granted. I believe this is creeping into public policy decisions etc and that we could be building the base for a return to inflation. I would like to see the Fed act more aggressively so we can hold this off as long as possible. I think inflation will return sooner than the CNBC crowd thinks it will but not as soon or as hard as your average gold bug. I would prefer the government took a completely hands off policy towards the dollar. Let market forces determine the right level. A free floating currency is also the best means of measuring the market's view of the effectiveness of government policy. Henry