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To: Little Joe who wrote (5371)	1/7/1998 5:28:00 PM
From: philv	Respond to of 116759

Little Joe: Very good observations and questions. We seem to be moving in two directions at the same time. The C.B.s are printing money while stock markets and currencies are crashing. Inflation & deflation. The Feds are naturally restrained from printing too much money for fear of what the obvious consequences would be. (Loss of confidence) Although we are in an equilibrium of sorts in Europe & North America, will the deflation side of the scale eventually tip the timid inflation side? Deflationary forces IMO are very strong, so it will be interesting to watch the maneuvering. Problem is, every fix has its price and consequences which can come back to bite you later on. For example, a drop in interest rates could cause the Dow to go even higher, and its teetering now.

To: Little Joe who wrote (5371)	1/7/1998 8:26:00 PM
From: Mark Bartlett	Respond to of 116759

Little Joe, << I think a lot of smart people are talking about deflation, but I can't see how it happens if the money supply is moving up, apparantly very rapidly.>> What happens if the Yen gets too cheap? Asia will start to dump their stuff into North America. Because North American goods are more expensive, people stop buying them. Soon that will mean less jobs in N/A .... more unemployment, less dollars to spends .... prices start to fall in N/A to compete with Asian goods ; profits start to fall ..... and so on, until a point of equilibrium is reached. Initially as the economy deflates, if you have cash, things look great. But sooner or later when the defaltionary process works its way through the economy, things are so hot any more. Thay is why IMHO the Japanese do not want the yen to get too cheap - it makes _them much cheaper to buy. I am certaily no economist, but that is how I see it at the present time. MB