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To: PaulM who wrote (3690)	12/1/1997 2:40:00 AM
From: PaulM	Read Replies (1) \| Respond to of 116815

Bank of Japan and Fed Reserve combined to create speculative U.S. equities bubble?????? fame.org .....and, of course, Japan is now becominbg the bubble's pin.

To: PaulM who wrote (3690)	12/1/1997 1:26:00 PM
From: philv	Respond to of 116815

Paul: The little guy always ends up paying the tab. I had always wondered how the governments might extricate themselves from the giant mountain of debt they so carelessly accumulated. High interest rates ensured that there was no way out. There is a way, though: 1. Lower Interest rates. Benefit to governments is obvious. 2. Allow governments to drastically increase their "revenue". (Tax) Lowering interest rates is Inflationary by definition, but this is offset by tax increases. The net result is a kind of equilibrium. Inflation is curtailed (by taking the resulting increased supply of money, benefits of lower commodity prices etc.) through higher taxes and government cutbacks. The average Joe on the street has seen little benefit of the low interest rate environment, and what he has seen by way of lower prices, is more than offset by government cutbacks and tax hikes. The plan must be to try to maintain this regime as long as possible, squeeze the taxpayer until the mountain of debt is reduced. That is why I believe inflation is not in the cards, why the Stock Market is so strong and partly why Gold is going nowhere. More money in pocket=higher taxes and/or govt. cutbacks. Ergo: Inflation/Deflation This cycle will only be broken when real wage increases become evident. That is why governments are always equating wage increases with inflation. The clever devils now tax back any increase. And then some! In the meantime, government takes credit for their conversion to suddenly being good managers of the economy; deficits are coming down and soon to attack the debt, stock market ever climbing, gold dead, and everybody running harder to try to stand still. The 5 trillion US debt is being targeted, guess who pays. So far its working and everything is beautiful. Comments? Regards: Phil