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To: Hawkmoon who wrote (43453)	10/21/1999 9:49:00 AM
From: Enigma	Respond to of 116762

wow a gathering of the verbose - I hope the NY Times is looking in!

To: Hawkmoon who wrote (43453)	10/21/1999 10:07:00 AM
From: Ironyman	Read Replies (1) \| Respond to of 116762

Ron,,,If the Arabs are the only ones left with unleveraged gold, what does that tell us? Irony Man

To: Hawkmoon who wrote (43453)	10/21/1999 1:31:00 PM
From: ahhaha	Read Replies (1) \| Respond to of 116762

What I'm saying was provided in great detail last year and I feel unmotivated to explain it all again. It is basic economics, but almost no one in the world believes in basic economics. They believe in media generated hysteria or academic synthesis. But I believe I understand why you believe any devaluation would only cause the yen to strengthen, This is an explicit contradiction. Creating fiat yen in a supply regime with too few yen doesn't cause devaluation. You have to separate internal from external. Devaluation is an external phenomenon. There is no necessary external effect from internally generated stimulus through fiat creation. Teitemeyer rightly said that countries must act individually and independently with respect to internal monetary affairs. He said that because he knows there is no necessary external consequence from that action. If a country pursues inflationary policies, their currency will fall in international markets. It's very important to understand that the currency move isn't prior to the economic policies a country chooses. The only exception to external consequences is the US and the dollar because the dollar is the world's reserve currency, so the US has to be especially careful about internal policy. Japan's wealth has caused the dollar to be subordinated in certain circumstances to the yen, but the subordination is transient as was evident last year when Japanese commercial banks abandoned the yen and ran to the dollar. and I would agree with one caveat. I believe the yen would initially weaken drastically, or if done properly in one fell swoop investors wouldn't have the chance to react, and thus the market would assume the damage was now done and the yen could strengthen from there. I would call this the "commodity market tail wags the dog" view. It doesn't work that way. The currency market is similar to the commodity market up to intraday or one day action. After that the currency market reflects real value flows. No shell game going on there which is contrary to the belief of every trader. You can't fool that market into believing that 2 + 2 = 5 like you can in the metals or industrial stock markets. Thus, the only way the yen can fall is that the US raises interest rates( and I don't mean the trailing nominal mark-up that is going on now ) or BOJ stops fiat yen creation. This is completely contrary to official highest level thinking. Yet, it is a conclusion of elementary economics. If you had asked 30 years ago, "what would happen if Japan created a lot of fiat currency"? People would say GNP would rise and interest rates would rise. Last year they were saying the opposite! Didn't you know that economic law is a function of time and fad?