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Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: Les H who wrote (178365)	7/9/2002 1:48:45 PM
From: Les H	Read Replies (2) \| Respond to of 436258

Foreigners, get ready to be paid back in cheaper dollars Well, it looks as though the fix is in. Greenspan has gotten the go-ahead from none other than his unbiased staff to step up US inflation. I am referring to the recent Fed staff study that everyone else is referring to these days, "Preventing Deflation: Lesson from Japan's Experience in the 1990s." One of the conclusions of the study is that when inflation gets closer to zero, the odds of deflation increase. Duh! If a price index is exhibiting no growth, then, of course, it is more likely to contract a 1% than if it were initially growing at 6%. The study goes on to speculate that if interest rates also are near zero when there is price-index stability, then monetary policy could be rendered impotent if deflation should occur. Why? Because with nominal interest rates at zero and accompanied with deflation, then the Fed would not be able to lower "real" interest rates. This is the conventional wisdom. Of course, the Fed could crank up the money printing presses, even at a zero nominal interest rate, and create more inflation. This would lower the real rate of interest even with a zero interest rate. more at investavenue.com maybe Al should just change his last name to Rosannadana. Sustained dollar weakness investavenue.com