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

To: Crimson Ghost who wrote (15540)	8/9/1998 11:34:00 AM
From: philv	Read Replies (2) \| Respond to of 116779

If the Fed raises rates, you know what that would do to foreign currencies. Can foreign countries compete with the US on interest rates? Before raising rates, they would want to see some inflation in Asia and elsewhere, otherwise the consequences for these countries who cannot raise their rates, will mean further hardships. Canada, for example, would like to raise their discount rate to defend their currency, but are reluctant and restrained because of their poor economy. So, the US is pushing Japan to increase liquidity, borrow and spend.......please. That is the formula, and when things get going, raising the rates a tad will not have a severe affect. Besides, how can one have inflation when prices are stagnant? The increase in money supply has still not produced any inflation except in the equity markets and real estate. An increase in rates slows things down. And as we all know, certain sectors have been on their knees for some time. I think we need to see clear signs of inflation before the Fed will raise rates. For the soaring US dollar, they should be lowering the rates. For the equities and housing market, a rate increase is indicated. So the argument goes on, thus they do nothing. Either course has significant consequences. By far, the best scenario would be for the rest of the world to "catch up" to the U.S., but it doesn't look like that will happen in the near future. Perhaps some other event will come along and dictate the direction the Fed will go. For now, stagflation rules.