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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: russwinter who wrote (5432)	1/18/2004 2:44:42 PM
From: mishedlo	Read Replies (1) \| Respond to of 110194

Russ - can you tell me why Japan failed to produce inflation when cutting rates to zero and and the same time, blowing billions and billions supporting the US$? At some point doesn't the debt just become so staggering and valuations (stocks ect) so high that it is simply impossible to inflate the problem away? Do you agree that deflation is harder to fix than inflation? I think a credit crunch is coming? Do you? Your article calls that credit crunch deflationary. ========================================================== From your piece DEFLATION AND ECONOMIC POLICY Deflation can normally be controlled by an expansionary monetary policy with the Central Bank or the Government allowing the money supply to expand. This causes interest rates to fall and stimulates consumer spending and investment demand. Occasionally though, when prices are falling, lenders may call in loans or refuse to lend out to potential borrowers. This is known as a credit crunch. Cutting interest rates may not be sufficient during a credit crunch. In this case, expansionary fiscal policy (lower direct and indirect taxes and higher government spending) is often prescribed to cure deflation. One reason deflation is difficult to cure is that nominal interest rates cannot fall below zero, while prices of goods and services can fall for a long time. In this event, monetary policy is unable to prevent higher real interest rates and the economy spirals downwards towards a slump caused by falling prices, contracting output, falling investment, plant closures and increasing levels of job losses in those industries affected.

To: russwinter who wrote (5432)	1/18/2004 9:29:52 PM
From: russwinter	Read Replies (2) \| Respond to of 110194

<and now has a strong and dangerous speculative (even hoarding) component> Story commenting on this: Message 19706511

To: russwinter who wrote (5432)	1/18/2004 10:30:38 PM
From: mishedlo	Respond to of 110194

Former Malaysian Prime Minister Mahathir Mohamad said on Sunday that Saudi Arabia should sell oil for gold, not dollars, to avoid being "short-changed" by a decline in the U.S. currency. "The price of oil is $33, but the U.S. dollar has declined by 40 percent against the euro so you're effectively getting $20," Mahathir told an economic conference in Saudi Arabia's Red Sea city of Jeddah. "So you're being short-changed." Saudi Arabia, the world's biggest oil exporter, has justified higher world oil prices by saying they are necessary to compensate for the slide in the U.S. currency. biz.yahoo.com