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To: Abner Hosmer who wrote (9277)	4/3/1998 7:30:00 PM
From: Alex	Read Replies (3) \| Respond to of 116768

Hi Thomas, entertaining day here. From the Skeptical Investor................... chebucto.ns.ca

To: Abner Hosmer who wrote (9277)	4/4/1998 12:11:00 AM
From: Terry Swift	Respond to of 116768

Tom: With a partially gold-backed currency, I don't believe Europe would have to use interest rates to be competitive with the US for investment capital. I think the Euro would be the 'safe-haven' currency and the soundest for investment capital. A stable currency is a prerequisite for capital investment on a large scale. IMO, its been a major element in this country's 15 year economic expansion (with the exception of the relatively mild recession in 90-91) that began in late '82. The social and labor policies? Ah, now there's a potential problem. Since a gold backed currency precludes Keynesian money-printing to stimulate an economy for social (read political) purposes, it will take strong leadership. Whether countries like Italy and France can exhibit that kind of leadership remains to be seen. I believe Germany can and I also think Germany is going to be first among equals regarding the new currency and the ECB. I find it hard to believe that Germany is going to allow its relatively strong currency to be replaced by a weak Euro. They would be big losers if the Euro turns out to be a weak currency nobody really wants. You would have a 2-tier currency environment in Europe. For commercial purposes business would be buying just enough Euros to do business while the underlying currencies of individual countries that were stronger than the Euro would be bought, used, accumulated, etc. for everything else. That would lead to the same situation the Euro is supposed to resolve. I don't see how the system could hold together very long with a Euro that is weaker than one or more of its member countries' currencies. No one would want it unless they absolutely had to buy it to transact business and then only enough to do so. That is one of the reasons why I believe the ECB will ultimately have a partially gold-backed currency. If they don't, the Euro won't survive. The implementation of the Euro is going to be a history lesson in what makes a strong currency or breaks a weak one. Terry