Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Richnorth who wrote (5369)	1/7/1998 3:43:00 PM
From: Alex	Respond to of 116752

Fed's Meyer seen shedding light on deflation idea WASHINGTON, Jan 7 (Reuters) - Federal Reserve Governor Laurence Meyer was expected to shed new light on the debate about the possible dangers of deflation for the U.S. economy when he delivers his quarterly economic outlook on Thursday. Fed Chairman Alan Greenspan last weekend devoted large parts of a speech to the American Economic Association in Chicago to the dangers of a broad fall in prices. He declined to say whether he thought a cycle of deflation was imminent but warned it could be at least as destabilizing as inflation. Analysts noted that his remarks might hint that the central bank has shifted somewhat from its traditional obsession with the dangers of inflation. But several Fed governors this week appeared to tone down the deflation talk by stressing that they were still very much concerned about an uptick in inflation. Meyer's fellow board member Susan Phillips, laying out her expectations for the current year in a speech in Chicago on Tuesday, said U.S. inflation was subdued but continued to pose the key risk to the economy's seven-year old expansion. Fed governor Edward Gramlich, in an interview with Reuters on Tuesday, also said it was unlikely the United States was at risk of entering a cycle of falling prices. In previous speeches, Meyer has repeatedly insisted that tight labor markets pose the biggest danger to the economy. He is seen as one of the most inflation-wary members of the central bank's policy-setting council and is a firm believer in NAIRU, the non-accelerating inflation rate of unemployment, which holds that inflation will rise if unemployment falls below a certain level. Meyer has said NAIRU may have fallen to around 5.5 percent. U.S. unemployment is currently running at a 24-year low of 4.6 percent. Fed policy makers next meet to discuss interest rates on Feb. 3-4 amid widespread expectations they will leave the key fed funds rate unchanged at 5.5 percent, the level at which it has been since last March. Most economists believe the financial crisis in Asia will tie the Fed's hands by dampening U.S. growth and keeping a lid on inflation this year. Meyer was scheduled to give the speech on his outlook for the economy to an audience at the Economic Strategy Institute in Washington at noon EST (1700 GMT).

To: Richnorth who wrote (5369)	1/7/1998 5:32:00 PM
From: PaulM	Read Replies (1) \| Respond to of 116752

Richnorth, IMO a strong dollar and weak gold is important not only for the U.S. but for all purveyors of paper currency. With the currency turmoil and potential for currency turmoil everywhere else, a decision was made that something had to remain strong, and the dollar is it. But..here's the rub...while the dollar is important, so is Chase Manhattan, Citicorp, Citibank, BankAmerica etc....As asian currencies plummet, bad loans denominated in dollars effectively rise by the day. A powerful incentive to devalue the dollar. What they'll try have is strong dollar, but not too strong, some inflation, but not too much... Ultimately though, they'll be forced to take one drastic measure or another, not the "tinkering" (somoene else's term) they would perefer to ensure stability.