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

To: Ahda who wrote (10975)	4/29/1998 11:34:00 PM
From: Jim McMannis	Read Replies (1) \| Respond to of 116950

Darlene, I don't know about shattering the economy with one rate hike but there is always the perception. I think AG is in a box. Damned if he does and damned if he don't. If he doesn't and inflation get's on a run he'll have to raise rates many times just to slow it down. If he does any hike. especially a pre-emptive one. Congress will be all over him. After all, the government is reaping a tax windfall from the reduced Cap Gains rate and the fact that mutual funds must distribute their gains to shareholders by the end of the year and then taxes are paid on these phantom gains. Any hike that slows the economy and investings as well as consumption and the ire of the Congress will come swiftly down on AG...not to mention those who have their retirement money tied up in the stock market. It hasn't been that long ago that those on a fixed income were ready to lynch AG for bringing down rates because they couldn't rollover their CDs at high enough rates. Just think what would happen if AG really puts the brakes on here. Now that I think about it...he took a lot of flack for the "irrational exuberence" statement... For now I think that the FED is content to leak and let the markets correct on their own. They can simply rationalize that paper asset inflation isn't "real" inflation. They can rationalize that the risie in Real Estate prices is just at the "high" end. They can only hope however that wage inflation stays in check. All this gives gold and inflation a chance. Jim