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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Giordano Bruno who wrote (69736)	9/30/2007 10:54:32 PM
From: TimbaBear	Respond to of 116555

If the FED said tomorrow 2007 cuts were finished.... Who would believe them?

To: Giordano Bruno who wrote (69736)	10/1/2007 12:46:33 AM
From: gold$10k	Read Replies (2) \| Respond to of 116555

"That the dollar is weakened by rate hikes will surprise some, but historical evidence confirms it. The dollar lost 67% against gold in 1972-1975 while the Fed hiked the funds rate from 3.5% to 13%. Similarly, the Fed funds rate rose from 5.25% in May, 1977, to 14% in February, 1980 (technically during the Volcker monetarism experiment after October, 1979), yet the dollar lost value from $150/oz to an all-time low against gold of $892/oz." realclearpolitics.com According to Paul McCulley, "in October 1979, the Fed announced that it would henceforth follow the “monetarist” doctrine of rigidly controlling the quantity of money" pimco.com That was just 3 months before the top in gold. So it would seem that it wasn't the raising of interest rates that stopped inflation, gold's rise, and the dollar's fall, but was an actual reduction of the money supply.