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To: Alok Sinha who wrote (27151)	2/3/2000 1:10:00 PM
From: JDN	Read Replies (2) \| Respond to of 64865

Dear Alok: You are preaching the company line in the old world order. This time IT IS different. Cold war is over. People around the world are massing to produce goods and services FOR USE, Communciation, education, freedom, everything it takes to produce a well oiled society are improving tremendously. In my opinion IF we have inflation it will be INTEREST RATE induced. But, I doubt that will happen. As interest rates drive up the cost of American products we will merely do more business overseas where rates are low, such as Japan. This of course will worsen the imbalance of payments. So all in all, IMHO it was a grave error to raise interest rates, instead we ought to be dropping them!! As to the savings arguement which is the only one left for raising rates, that should be handled through taxation. ie make investment income TAX EXEMPT as it SHOULD BE and people will increase their savings rate tremendously. JDN

To: Alok Sinha who wrote (27151)	2/3/2000 1:15:00 PM
From: JavaGuy	Read Replies (3) \| Respond to of 64865

Alok, As the long bond continues it's rally.... Seems destined to go below 6%. I agree with most of what you said, and we've got some fairly astute finance/econ understanding around here. I am always the statistical skeptic, seems someone is always playing an angle, so here are the thoughts of a sleep deprived, overworked programmer... I have heard a lot about the increase in margin use, but no one I have seen ever relates it to the equity%. If equity is rising at a faster rate than margin use, then margin use is declining proportionately. I fully believe that with the markets near record highs, that the total $ value on margin being at a high should be expected. As far as spending and savings rate goes, are people outspending their equity gains? Now that would be bad. I see the published neg spending rate (-4%?) more reflective that most (wealthy?) people are spending their income, plus some gains. My guess is that the "real" savings rate is positive and most are not outspending their cap gains. How does one calc the savings rate anyway? Is it a mean, median, sample of the entire population? If this -4% is the percentage average of all individuals, it is extremely misleading. Since the top 20% of investors control over 80% of the wealth, what is this group doing? If this to 20% goes on a wild-ass spending spree, the economy will feel it. Personally, I have reduced my personal savings rate to around 14% from ~20% as annual savings are having a lesser % impact on my portfolio each year. And continuous empl stock option grants have the effect of reducing savings as well. I am also guilty of increasing my margin debt, but maintain the same or greater equity%. So, you could always blame me and folks like me for scaring the Fed. Boo. I understand the overall point that high margin and spending don't mix. If the market downturns, margin calls and spending can dry up quickly. Those that treat margin like Vegas and only press their bets when winning could get smacked. -JG