Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Cisco Systems, Inc. (CSCO) -- Ignore unavailable to you. Want to Upgrade?

To: GVTucker who wrote (59216)	5/3/2002 10:22:41 AM
From: ahhaha	Read Replies (1) \| Respond to of 77400

But I disagree with your notion that inflation is not a worry in the near future. I gave no notion that inflation is not a worry in the near future. It could have been gleaned from what I said that as long as FED interferes with the free market's pricing of money by fixing the fed funds rate, there will always be a threat of inflation in the future. This is what the poster, Grace, was saying. The median CPI and core CPI (ex food and energy) bottomed out early in 1999 and have been rising ever since. Indeed, there never has been one year in the last 50 when the CPI fell. When you say "bottomed" you mean that it bottomed in its rate of growth slowing. The FED believes that a little inflation is good just like a little drink never hurt anyone. It is not a coincidence in my mind that the price of gold bottomed out soon thereafter. The 'Bugs think gold is rising due to debt induced deflation. To the extent their two cents effects markets, to that extent they're right, but deflation isn't possible with FED intervention. Oil price rise causes a deflative counter force, but that doesn't last. Gold is rising from rising expectations for inflation. The same expectations are causing re-allocation of assets out of the dollar by foreign entities and it is that which causes CSCO's price to fall even though the net flow of money is strongly into the stock. Domestic institutions are using foreign dumping of the stock to accumulate at attractive prices, and this process is occurring in most NAZ stocks. Now, the dollar has begun to weaken, the last stronghold against inflation here. This has been the popular view for 30 years, but I'm not so sure that it's so true now. It depends. One of the world's great bankers, Hans Teitmeyer of the Bundesbank, convincingly showed that each country must pursue monetary policy independently of its neighbors. If the US pursues a responsible monetary policy, even if the dollar falls, beggar-thy-neighbor wage cost push won't rise meaningfully. There will be too many unemployed! Here's just an anecdotal thought: the stock market to a degree has subsidized costs that otherwise would have risen. It's a novel thought. The stock market rose in the late '90s due to loose monetary policy rationalized by WinXXX productivity growth. At the same time the 'crats maintained their tight fiscal policy war on wealth. There is no worse combo. The stock market balloon represented the form of inflation that resulted. Now that this promise has not been kept, telecommunications suppliers will have no choice but to raise prices, because the capital markets will no longer subsidize those losses. If they can. That's all the problem. What they have isn't good enough. It isn't that dear like oil. There is another way. They can make what they have better. That takes lower taxes on capital and that is against 'crat Law. What's better? Inexpensive 10 mbps to the desktop which is the minimal needed for, say, VOD.

To: GVTucker who wrote (59216)	5/3/2002 10:29:06 AM
From: RetiredNow	Read Replies (3) \| Respond to of 77400

You said it. Once the dollar weakens, as I think is inevitable, we'll see inflation start to rear its ugly head. Add to that a potential oil shock as we go to war with Iraq, the price increases to bring all these struggling companies back to profitability, and the out of control money supply increases...well, I think it's clear that inflation is going to come back strong and the fed is going to have to raise rates like a madman to keep it in check. I think inflation will come maybe in the latter half of this year to early next year. The fed rate increases may very well put us back into the dreaded double dip, unless the consumer and businesses, backed by massive defense spending can keep the economic horse alive. We'll see. Either way, defensive plays are a good hedge. Land. That's my big defensive play. BTW, you Japan-bashers out there, did you know there was an article in WSJ today talking about our real estate is beginning to recover out there? REITs are really cashing in on it too. My real estate mutual fund has really helped me out in this downturn. I hope it continues.