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To: Les H who wrote (179903)	7/15/2002 12:37:05 PM
From: ild	Respond to of 436258

Les, do you by any chance have a link to the FED article Roach mentioned in today's dispatch: ....... An analogous asymmetry seems likely in the policy arena. The post-bubble perils of the debt-deflation cycle are the ultimate nightmare for monetary and fiscal authorities. Just ask Japan -- or, for that matter, the United States in the 1930s. Policy makers cannot afford to take these risks lightly in the aftermath of a popped asset bubble. That verdict comes through loud and clear from a recent joint research effort just published by some 13 economists on the staff of the Federal Reserve Board (see "Preventing Deflation: Lessons from Japan’s Experience in the 1990s," International Finance Discussion Paper No. 729, June 2002). The Fed paper makes it quite clear that just the risk of deflation in a nation’s aggregate price level should be sufficient to trigger aggressive reflationary policies. The popping of a major asset bubble at low levels of GDP-based inflation -- precisely the case in the United States -- only serves to underscore those very risks. ...... morganstanley.com