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To: Perspective who wrote (76542)	6/24/2003 8:15:32 AM
From: skinowski	Respond to of 209892

True, that statement about markets doing well during inflation is very questionable. For example, the markets during the late 60's - early 80's remained in a range, "nominally" going nowhere, but the underlying currency - the dollar - was devastated to the tune of 75%. Even if the markets would have doubled during that time, one would be still losing money. The Gov prints money like crazy, but most of the money they created merely went to inflate the real estate - and to (temporarily) support the economy, as people use their homes as collateral for borrowing - and end up spending the money. If real estate deflates in a serious way, that might create a liquidity crash which may overwhelm Uncle Sam's printing press - especially if more dollars go to the money heaven in declining financial markets. In other words, I think that we may see a deep deflationary period in the US irrespectively of the Fed's efforts. The true sign of the times is that the real challenge seems to be wealth preservation.