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To: NOW who wrote (120089)	9/8/2001 9:30:39 AM
From: Tommaso	Read Replies (1) \| Respond to of 436258

I think that yields can fall until increasing inflation makes lenders (or savers) demand higher interest to compensate for the loss of purchasing power. That's pretty much what happened in the 1970s and I don't see why it can't happen again. It seems to me that the entire world financial system is very precariously built on a dollar that is greatly overvalued. And the minute the dollar slides, all prices of imports, including imported oil and maybe even natural gas from Canada, will start to rise. If bank runs and deflation were the liability during the nineteenth century and up through the Great Depression, it may be that episodes of stagflation will be the consequence of fiat currencies worldwide. There really is no way out for the United States and all its debt-ridden citizens than another period of 100% inflation (or 50% devaluation) of the US dollar combined with sounder credit policies. Greenspan's huge expansion of the money supply is making way for this, it seems to me. At least this time there really is a safe option: inflation-adjusted bonds. I say "safe"--just bare preservation of real wealth. And even there the government expects you pay taxes each year on the appreciation of the bonds. But they are certainly suitable for fixed-income, tax-protected, retirement funds. There generally turns out to be some unexpected liability in every other "beat-inflation" scheme.