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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Henry Volquardsen who wrote (5554)	2/10/2002 7:20:36 PM
From: Hawkmoon	Read Replies (2) \| Respond to of 33421

the point that a currency like the dollar which provides a real rate of return offers better long term protection than gold. Excellent analysis Henry.. And while I accept your assessment that lax capital controls make fiat devaluations similar to the '30s more difficult, can't we present many examples such as Mexico, Ecuador, Brazil, and others, where such devaluations have occurred? And while I concur that I would rather have a currency backed upon the economic prosperity of a nation, rather than by a shiny yellow metal, I can't ignore the fact that a massive devaluation in Japan will only increase the pressure upon the US economy. It would certainly send us back into a double dip recession, probably stronger than the one we're supposedly emerging from now. Right now the value of the USD is being assessed according to expected economic growth. Such economic growth would be negatively impacted by a Japanese devaluation. On top of that, since Japanese assets would be far more attractive, I believe we'd see a massive outflow of capital from the USD into Japan, buying up those firesale deals, which would decrease the strength of the USD. Thus, until the uncertainties were straightened out and a bottom put in on the yen, I would probably see gold as doing better than the USD. What do you make of that potential scenario? Hawk

To: Henry Volquardsen who wrote (5554)	4/11/2002 9:30:00 AM
From: John Pitera	Read Replies (1) \| Respond to of 33421

Hi Henry, reflecting back on your post from two months ago, how do you think Japan is making out in their attempt to break out of their Sargasso Sea of Inaction? I was surprised to see that the Monetary Base in Japan had grown 27.5% in the 12 months ending this February. Yet in reading the WSJ page one story on BOJ chief Hayami on March 27th, It seems like he is unwilling to commit to a full-scale reflation and depreciation of the Yen. Message 17295050 As I had mentioned "Very interesting how 77 year old BOJ head Hayami lived through the raging 200% hyperinflation of Post WWII Japan and this shaped his monetary outlook much as the Weimar republic Hyperinflation of the early 1920's has for a two generation of German central Bankers. It has created a cognitive dissonance for Hayami. He can not fully embrace a full scale reinflation of the Japanese economy, even though many economists and market strategists feel that a Total reinflation is that most expedient way out of Japan's Economic Quagmire.' Of course with him being 77 years old, we can say he will not be running the BOJ forever. John