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To: Lee who wrote (35886)	3/27/1998 4:25:00 PM
From: Boplicity	Respond to of 176387

Thanks Lee. I know this, you know this, jim and paul, know this, other know this, but our Yaley does not. Greg

To: Lee who wrote (35886)	3/27/1998 4:55:00 PM
From: Chuzzlewit	Read Replies (2) \| Respond to of 176387

Lee, I have no doubt that you are correct in the short run (six months) for two reasons. First, increasing the discount rate will strengthen the dollar which will result in a sea of Asian imports. This is not the kind of policy the Fed is likely to embark on. Second, the Asian malaise and the decrease in the price of oil are two of the principal reasons why inflation remains low. Ordinarily you would expect a sharp drop in the price of oil to stimulate the economy, but the countervailing Asian slowdown has put a crimp in US economic growth. So, even given the recent upswing in the price of oil there is no reason to believe that inflation will re-emerge. At worst, I think all OPEC can do is avoid further erosion in oil prices. In all probability cheating on quotas will resume and oil will once again drop in price. In short, there is nothing on the horizon to indicate a dangerous reheating of the economy. In order for this scenario to change we will need to see a sharp upswing in SE Asian demand for US goods and an increase in the price of oil. I don't see that happening for at least six months. Regards, Paul