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To: NOW who wrote (60286)	11/23/2002 1:01:54 AM
From: Perspective	Read Replies (2) \| Respond to of 209892

I think they're probably realizing that the real problem is the current account deficit, and that the least painful way to solve it is through a dollar devaluation. Like Bernanke made a specific point of yesterday, the dollar devaluation in the mid 1930s was successful in both curing deflation and jamming asset prices higher. Can they say this in public? Hell no. But they can say things that will cause the market to effect precisely the change they desire. I don't believe this is the correct approach. They've already messed up asset pricing terribly, and every day asset pricing remains so terribly out of whack is another day that capital is misallocated. The right solution is to let the markets correct to fair valuation, flush the companies that should be flushed, and fight the inevitable social consequences with temporary government subsidies and retraining programs paid for with deficit spending. That overt approach would be the best way to go, but they'd rather try to be sneaky about it and quietly devalue everyone's dollar-based assets. Either way it's a government taking. But their approach doesn't do much for the credibility of your currency or your central bank. BC