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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: Real Man who wrote (63949)	5/20/2003 12:14:42 PM
From: Skywatcher	Read Replies (1) \| Respond to of 94695

...On Snow's encouraging words, the dollar slumped another 20 points today, while the euro rose to within a penny of its all-time high of just over 1.17. It should be noted that not all is well on the part of President Bush's economic team. Receiving their walking papers, so far, have been the Secretary and the Deputy-Secretary of the Treasury, the head of the National Economic Council, the Chairman of the Council of Economic Advisers, the Director of the Budget, and the head of the Securities and Exchange Commission. In the meantime, the IMF warns that Germany is at high risk of deflation and that Japan might suffer further price declines. The IMF added that Hong Kong and Taiwan are also experiencing deflationary pressures. The IMF appointed a special task force to study deflationary risks in the world's 35 largest economies in December amid rising concern about global price declines. So what's really happening? The world is suffering from too much in the way of goods -- and consumers are exhausted from too much debt and too much spending. A major problem aside from over-supply and under-consumption is the vast differential in wages between the developed nations and China, India and the Asian nations. The fact is that China alone could easily supply the entire world with all the manufactured goods that it needs -- but even that would not solve chronic Chinese unemployment. All this puts a frightened US Federal Reserve in a difficult spot. The US is confronting a half-trillion dollar (or more) budget deficit, a half-trillion dollar (or more) current account deficit, a dragging economy, and in the face of this the Bush Administration is pushing for major tax cuts and stepped up spending. No currency can hold up in this kind of climate. Something had to "give," and that something is the dollar. The Fed has little choice but to open the spigots of the money supply and warn of even lower rates to come. At the same time, the Fed, almost daily, predicts that some of the surging liquidity will somehow be spent by consumers who are already "spent up," and by manufacturers who don't need to build new sources of supply. The more the forces of deflation press on the US economy, the more panicky the Fed, and the more the Fed will work the liquidity spigots while warning of lower interest rates to come. The beneficiary of this gathering economic nightmare is real money -- better known to you and I as gold... 321gold.com CC