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Strategies & Market Trends : ahhaha's ahs -- Ignore unavailable to you. Want to Upgrade?

To: ahhaha who wrote (2058)	4/18/2001 4:06:10 PM
From: ahhaha	Read Replies (1) \| Respond to of 24758

Posted on Yahoo in response to a claim that "FED does have unusual flexibililty (to cut) here". first the dollar is very strong, very positive for inflation. This doesn't have the same consequence in this era as it once did. If the world has reverted back to intrinsic or maybe even overt deflation, you have to look at the dollar inverse to the way it acted during the intrinsic inflation of the '70s. 2nd - japan in recession -meaning they once again will tend to export reduced interest rates to us This is a misleading way to express the economic connection between the two. In the past argument the was based on the availability of T bonds and the virtuous refactoring cycle. Now there is a different reality. When domestic demand falls it hits imports most. This is due to the narrowing in world wide labor cost approaching now parity, China notwithstanding as they inflate their way to inefficiency. Further, there is no connection between the two monetarily as Hans Teitmeyer stressed some years ago when he asserted that all countries needed to pursue independent monetary policies and which the world's economies have followed. - as they continue to sell us (and finance) massive quantities of high quality goods -thus keeping inflation relatively low in the U.S. This mechanism is rapidly losing its validity especially with the disappearance of T-bonds. Just where does Japan factor its accumulation of dollars? They're confronted with the same problem expressed by FED research about how to conduct open market operations. What do you buy? Mortgages? Eurodollars?? Gold? American products! There is another reality starting to develop and that is competitive American products, not because Americans are competitive, but because they have no choice but to be competitive, since the Democrats couldn't protect labor in secure indolence over the last 20 years.