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Gold/Mining/Energy : GOLD-XAU -- Ignore unavailable to you. Want to Upgrade?

To: Dwight Taylor who wrote (1453)	4/23/1998 12:55:00 PM
From: Jim McMannis	Read Replies (1) \| Respond to of 1756

RE:" <<The longer the authorities delay raising rates, the higher gold will go. >> Because rate hikes will be viewed as the FED is ahead of the inflation curve and slowing down the economy...stopping inflation before it starts. As long as rates are low, oil low etc. there is a chance for inflation to get cranked up. What actually happens is that gold/stocks will run up insofar as it's percieved that rates at high enough to incite recessionary tendencies. I think the case for gold stocks is still fragile enough that just a direction change by the FED would put a crimp in them as well as the overall market.

To: Dwight Taylor who wrote (1453)	4/23/1998 2:09:00 PM
From: ahhaha	Read Replies (1) \| Respond to of 1756

The longer the authorities delay about cooling off accelerating demands for goods, services, and compensation, the more embedded will be the inflationary expectations. Our economy is leveraged to exploding costs. The inflation is in the pipe now and you'll be getting it this summer. Everyone gets a raise if prices rise. This causes exponential growth in prices and requires draconian and practically undoable actions to stop it. Starting with the McChesney Martin FED and carried on through to Greenspan is the liberal tendency to err on the side of ease. In the last 10 years there has been the tendency to err on the side of restraint because the market psychology was prejudiced in that direction after the experience of 21% interest rates. The FED couldn't fight that psychology. In pursuing their new-found religion of rigor and vigilance they sowed the seeds of exploding wealth through deprivation. The US has been working hard generating value but the FED has erred on the side of restraint keeping great expectations too firmly suppressed. The money didn't get spent. Now the middle class is tired of working while big shot execs make tons for failure. That's misleading, but that's the perception. So now they want theirs. When the society starts getting wealthy, the people start going left because they can afford to be generous. The result is inflationary wage demands and popular support of monopoly union excesses. The problem here is central bank intervention based upon their assumption of knowledge about the way things are. This is called "pretense to knowledge". With all their data, computers, worldwide feedback, and pseudo-intellectualism, they still can't get it right. That's why we have free markets. Because of events like the Monetary Panic of 1907 the pretense to knowledge is extremely embedded. Authorities simply can't stand around and do nothing while people are getting hurt. They have to use their presumed power to help. That just adds fuel to the fire for the next wrenching. The solution is to let people solve their own problems. People are incredibly skilled at doing this, but not when they are being taken care of. We all like to pay the protection money. Currently the cycle has come full circle. Even though the majority of board members want to raise rates, even though high school students see the necessity of it, the FED will delay. They'll justify it by trotting out excuses like Asia. Part of the problem is tinkering mental linkage. The thinking goes: if we raise rates, the stock market will crash and then we will have to open the money flood gates to bail out our worthless inefficient society. That will cause inflation so we will have to slam on the brakes. Square well monetary planning. Do you notice that the thinking is always what they will do. Pretense to knowledge. They have said that all they need to do is control inflation through money growth, but what has evolved is adaptation to ever higher money growth because the marginal efficiency of labor is still positive though falling. So even though money growth is rising interest rates are constant. The FED simply doesn't know when the changeover takes place because it is in the minds of people, not in real economy, so it can't be measured. The free market would gradually raise rates, but there isn't enough conviction or fear to go against central bank authority. Central banks claim they can't fight the market, so why do they fix rates through the discount mechanism? Answer: to provide big boy expectational stability. That answer is so dumb it isn't worth refuting but to say it is exactly contrary to belief in the free market mechanism. I can add that the FED drained reserves today when they were expected to add. So maybe the high schoolers are getting through to them.