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Non-Tech : Deflation -- Ignore unavailable to you. Want to Upgrade?

To: JF Quinnelly who wrote (224)	1/18/2004 4:46:03 PM
From: Maurice Winn	Read Replies (1) \| Respond to of 621

jfred, that's a programme for inflation then, not deflation. This is like Waiting for Godot. Or the Second Coming. Mqurice

To: JF Quinnelly who wrote (224)	1/23/2004 6:21:59 AM
From: Ilaine	Read Replies (1) \| Respond to of 621

We don't defend the dollar exchange rate because we can't, so there's no point even trying. It's the Mundell Fleming trilemma. We picked the other two choices - free flow of capital, and ability of the central bank to carry out monetary policy in order to stimulate or slow down the economy. European countries gave up the ability to raise and lower interest rates and increase and decrease the money supply and thus, have the ability to control exchange rates. Historically, China gave up free flow of capital, so had the other two, which is why Chinese currency is pegged to the dollar. Thus, as the dollar falls, the Chinese exchange rate vis-a-vis non-dollar currency falls, too. Our economy is big enough that we scarcely notice the exchange rate. Commodity prices are such a small part of finished goods in the US.