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To: Zeev Hed who wrote (201839)	11/3/2002 12:26:54 PM
From: ild	Read Replies (2) \| Respond to of 436258

Zeev, I'm not saying that currencies must be somehow pegged to gold. My point was that there is so little gold comparing to all paper money so that investment demand in gold may skyrocket (from a very low base). Also crowds like chasing things that go up. A few years ago they chased CSCO stock. And gold is much much better than any stock. You can feel it. Also there is finite supply of it. How do you like latest dispatch from Pimco's Paul McCulley? pimco.com ...Bottom Line The time has come for the Fed and the U.S. Treasury to join forces, with Alan Greenspan cutting short rates and Paul O'Neill explicitly declaring that a strong dollar is not in America's interest. It is also time for America to announce to its G-3 partners that a weaker dollar is not a problem to be solved, but an opportunity to be seized by Euroland and Japan to aggressively ease monetary policy, using all available means, including non-sterilized currency intervention to temper the dollar's fall, and monetization of private sector assets. Yes, my friends, it is time for G-3 Keynesianism, in an all-out preemptive war against deflation. Next Wednesday's FOMC meeting provides an excellent opportunity for the Fed to start the campaign. Here's what I'd like to hear the FOMC say: "Incoming evidence, from both high-frequency data on Main Street and price action in capitalism-driven private sector asset prices on Wall Street, suggest that the risks to renewed economic growth are deteriorating, while the risks to price stability are unfortunately skewed in the direction of deflation in global-trading good prices. Accordingly, the Federal Open Market Committee, cognizant of its responsibility to promote stability in both the domestic and global economic theaters, voted today to cut the Federal Funds rate by 50 basis points, to 11/4 percent, while encouraging the U.S. Treasury Department to incorporate this action into its setting of American currency policy, and asking other G-3 members to take complementary actions to stimulate recovery in globally-traded goods prices. A revival in global profitability in the traded goods sector, as evidenced by an end to deflationary pricing exigencies, should be the collective, and united objective of G-3 monetary authorities." The FOMC's not going to say that, of course. The FOMC is, however, likely to cut the Fed funds rate by 50 basis points to 11/4%. And I'm willing to bet that the European Central Bank follows in a matter of weeks, if not days. ...