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

To: RealMuLan who wrote (380)	1/3/1998 11:15:00 PM
From: Rational	Respond to of 9980

Yiwu: I agree with Greenspan's expectation that deflation will have a negative impact on values of assets like real estate and stocks, as I have stated in one of my posts. The real economic effects of deflation are increases in real rates of interest and wages, pushing up the real cost of capital and wage, as well as more unemployment. Product price cuts (to stay competitive) and higher real costs of input will squeeze corporate profits, leading to lower tax collection and greater budget deficit. I thus do not find his comments surprising. But, when Greenspan utters something like what he said at the AEA/AFA, I read real serious problems related to deflation. Sankar