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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: Don Lloyd who wrote (14893)	2/11/2002 3:05:13 PM
From: AC Flyer	Respond to of 74559

Good post, Don. Agree.

To: Don Lloyd who wrote (14893)	2/11/2002 3:48:58 PM
From: Maurice Winn	Read Replies (1) \| Respond to of 74559

Don, yes to all that and my theory has been for years that Uncle Al would hijack the improved productivity aspects of deflation by increasing the money supply to maintain constant prices, even though they would be falling otherwise. To me, that process would assure continuing rises in the stockmarkets while inflation would remain near zero. So far, so good, the current market clearing of dot.comania and techwreck irrational exuberance notwithstanding. A few years ago, when the bubble became obvious, I figured that when it went kaput, Uncle Al would print money flat out to avoid the nasty deflation you mentioned [and much more urgently than merely confiscating the productivity improvements]. That would have the effect of preventing real company share prices from falling seriously and setting them up for great gains when the bubble was cleared from the markets. So far, so good. Sure enough, we are right on plan. Then, Uncle Al would quickly move interest rates back up to establish equilibrium again. That process is to be started later this year. Maybe as early as March! Sound companies, holding cash, with no debts, and developing markets and participating in globalisation [even prosaic companies such as Procter and Gamble - though I hasten to add I know nothing about them except they make soap and stuff] will then zoom in value and people will be amazed! QUALCOMM is an example. Microsoft another. Cash by the truckful. Markets expanding with no end in sight. Vast possibilities in new technologies. 6 billion people, all wanting the services and increasingly able to afford them. It's not like oil - there simply isn't enough for 6 billion people to enjoy the USA consumption rate. But everyone can have a clone of software. ASICs cost almost nothing. Some people will be happy lying in their gold bathtub while all this is going on. Seems nuts to me and after half an hour in the bath, I think they'll get bored, even if they slap themselves with their checkbook and wear a gold chain too. The effect of the ethanol in the bath might be untoward too - possibly affecting their libido and ability to slap. Mqurice