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To: Perspective who wrote (240849)	5/16/2003 4:15:22 AM
From: zonder	Read Replies (2) \| Respond to of 436258

The price mechanism responds to currency devaluation with a lag Of course. But do you realize that the "lag" in question can be a Very Long Time? So acting on your initial statement of "a 2:1 split [of USD] - what happens? Well, prices for all things would double" might not be as profitable as you think in the coming year or so... Look at countries that lived huge overnight devaluations - Turkey, Argentine, etc. Do you think the price of everything adjusted fast... or at all? Let's say currency is devalued 40% overnight (true story). Most people with salaries will still be making the same local currency salaries. How long do you think it will be before they are willing to pay 40% more on the stuff they buy?