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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Joan Osland Graffius who wrote (99471)	7/23/2003 10:41:02 AM
From: AuBug	Read Replies (1) \| Respond to of 132070

Since deflation is a reduction in the number of dollars available to spend it leads to lower prices. Right now the number of dollars is artificially inflated by reductions in interest rates & the elimination of prudent banking reserve rules (i.e. the 100%+ loans on your home) and China & Japan propping up the dollar to increase the current account deficit with the US, which they can only do for so long. Very soon people will become overwhelmed by servicing their debts and discover that this bear market rally will not save them. Then we'll see the major leg down in this bear market. I just can't see when it'll happen, I've always found things seem to always take longer to unfold than one would think. I like both of the Prudent Bear funds and continue to add to them. But, I'm thinking trading futures may be the best way to go for me since I can go long or short at will. I'm thinking that buying the Chinese renminbi might be a great trade. They've fixed it to the dollar to maintain cheap exports and increase the trade deficit with the US. I recall that when they were admitted to the WTO they had an agreement to float their currency but I'm not sure what the deadline is. A recent issue of the Bank Credit Analyst China Investment Strategy has a special report on revaluation of the renminbi which presents data such as the forward rate provisions of joint venture contracts etc that indicates that many investors believe that it is imminent that the exchange rate of the renminbi will go from its present 8.4 RMB to 1 USD to something much lower. I found a renminbi denominated CD at Everbank.com that one can buy that yields essentially nothing but is a vehicle to convert USD into RMB and wait for the revaluation. It seems one could more than double their money on such a trade. I sure would appreciate hearing from anyone who can enlighten us further on this proposition. As for AGs belated fascination with NG prices I think that it's just part of the quid pro quo for Bush's reappointment to his cushy career bureaucrat job where his testimony will help Bush pass his energy bill to pay back the oil boyz that bought him his presidency. It's a real shame we can't get someone competent to chair the Fed.