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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: Geoff Nunn who wrote (244)	12/29/1997 7:02:00 PM
From: Tommaso	Read Replies (1) \| Respond to of 9980

I am not sure that the Japanese are planning on taking my advice, so your fears will probably not be realized. Are you sure that you have not heard of any dumber ideas than buying gold, though? How about the idea of invading Russia? That idea has occurred three times--to the Swedes, to the French, and to the Germans. Millions of people considered it a fine idea. Many people feel that although a tax cut seems like a good idea, and that raising taxes was a very bad idea, that the Japanese are so thrifty that they are likely to save money released by a tax cut rather than spending it. So it wouldn't work all that well. Americans spend their tax cuts, so it works here. Gold is a luxury and is largely useless. The Japanese need to spend some of the money that they have earned, and now that no more Van Gogh paintings are for sale, the easiest thing for them to spend it on would be gold. They could also start a war, of course. That is a way of spending a lot of money. The Second World War was what pulled the United States finally out of the Great Depression. It wasn't planned that way but that was the effect. Of course, maybe someone in the Japanese government could imagine some kind of large-scale public works project. In the Great Depression the U. S. Government actually paid people to dig holes and then fill them back up again. (there were also a lot of more worthwhile projects--building trails and campgrounds, for example, and painting murals in public buildings). If the Japanese bought gold they would have something that they could sell any time they wanted to without throwing the United States Government into consternation--which is what happens whenever the idea of selling U.S. bonds comes up. The United States must be a very stupid country. We continue to hold onto very large gold reserves.

To: Geoff Nunn who wrote (244)	12/29/1997 8:26:00 PM
From: Tommaso	Respond to of 9980

What I offered as a somewhat flippant conversation-starter, as I turn it over in my mind, takes on new dimensions. I am not at all sure that if the Japanese printed money and exchanged it for gold it would be such a dumb thing to do. If I could do it I would. Of course, even better would be to hire Rumplestilskin to turn flax into gold. I will be happy to make a public exhibition of my stupidity by drawing up certificates that are worth one thousand genuine Hornswoggles each and exchange each of them for an ounce of gold. Unlike ordinary money, each note will be personalized, making it potentially much more valuable. But now let us be serious. Since I don't go in for adding <grins> [i.e. <gggg>, <vbg>, etc.] to what I say, perhaps I should add "<s>" for "serious." I don't really care what the Japanese do to the US stock market because it is absurdly over-valued, but I am concerned about Sankar's idea that the new preferred stock might supplant US bonds and drive up long-term interest rates. If the Japanese won't inflate, maybe the Federal reserve will, despite all of the rhetoric. In fact the rapid growth of the money supply suggests they are already monetizing debt at an increased rate. So if the Japanese won't print paper, America will have to step in and do it. If the Japanese would buy gold, they could turn banker to the world and supply much of its currency. There is a great need for a huge supply of a medium of exchange for the world economy to function. America can just turn out those fancy new un-counterfitable $100 bills and buy in as much of that debt as they want. Inflation is an evil but a 25% inflation is far better than a 25% depression where people quit working altogether.