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To: D. Newberry who wrote (4626)	10/9/1998 11:00:00 AM
From: Captain Jack	Read Replies (1) \| Respond to of 21876

Darryl --- I am not sure they will put money into US bonds vs their own for less than 2 or 3 %. They may feel their patriotic duty and be more comfy with the cash at home. At 3+% there is a greater chance. Part of the reason our mkt fell so hard the past 2 weeks had to be influenced by their belief there was a greater chance of increases in their mkt and pulled boat loads from the US in a short time frame... Just my ramblings----------

To: D. Newberry who wrote (4626)	10/10/1998 2:27:00 AM
From: ed	Read Replies (1) \| Respond to of 21876

There are a lot of factors the FED has to consider when cutting rate. 1) Will the cutting of rate stimulate inflation ? In the current environment, the danger is deflation, the more companies sell the more companies lose. As a result, there are a lot of unused capacity of factories around the world, which means to compete for the limited market with unlimited unused capacity of production, companies have to further cut price and sacrifice profit, and we will eventually get into an endless cycle of competition for market by cutting price. This is will eventually lead to the big depression, mess bankruptcy, mess unemployment, and consumers will completely lose confidence in the economy and the future, and will tight their pockets. Which also means no matter how low the rate is, consumers will not spend at all. I call this a deep depression of no return. So, FED should further cut the rate before it is really too late, and FED should cut the rate for at least another full 1% to stimulate the consumption, and lift the confidence of consumers. As to inflation, it is just too remote to worry at this point. 2) As I said whether the rate is too high or too low is a relative concept. The current rate of countries around the world is balanced at a high level. To maintain the balance at a lower level, all countries should lower their rate simultaneously so that the rates of all countries will balanced at a lower level, as a result, the exchange rate of currency will not fluctuate as a rate cut, because every country is cutting its rate simultaneously, and which will stimulate the spending of each country and help the growth of worldwide economic activities. The current problem of world economy is money stop moving from hands to hands, which means no economic activities. Consumers do not spend, producers can't sell, people lost their jobs, which means no income , and the world economy was led to a dead cycle. So, the answer is to stimulate consumption by cutting rate , this should be done before it is too late, that is when the consumers are so depressed about the future and the economy that they stop spending no matter how low the rate is. Did AG see the danger in our economy ? Will he cut the rate aggressively to save the US or the world economy before it is too late ? Will Republican congress stop destroying the US economy so that a republican candidate can be elected in year 2000 by taking advantage the great depression in year 2000 ? I believe AG saw the danger and will cut the rate aggressively in time. By looking at the drama of sex scandal , that the republican try to impeach the president for a private matter , I call it political fight, and that the Republican ignore people's opinion not to impeach the president so that he can concentrate his effort on important issues which will benefit the whole country and the people, I believe, the Republican congress will try to destroy the economy after the sex scandal is over so that they can take advantage of the great depression in year 2000 for the presidential election. That is something worry me . People should kick those Republican congressmen out of the congress with their votes in the comming Nov election. I call this PEOPLE's POWER, and should not be ignored by those politicians. Will GA

To: D. Newberry who wrote (4626)	10/10/1998 3:01:00 AM
From: ed	Read Replies (1) \| Respond to of 21876

In the past FED worried about inflation, but it did not know that deflation is a big nightmare for the economy and it is much much more dangerous and destructive. In an inflationary environment, we have less supply but more demand, and producers had unlimited market to sell their products, which means full employment. The price of goods go up every year, but the salary is also raised every year, and companies have much room to increase the price and profit margin to maintain the high salary structure. and the economy continues to grow to a higher level every year. In a deflationary environment, we have more supply than demand, and producers have to cut price to compete for the limited market to an extend that the producers will not have any profit by selling products , and the more they sell the more they lose. To survive in the competitive market, the producers will eventually mess lay off their employees, and eventually mess bankruptcy, and the economic activities stop completely. The US can not expect we will completely immune to the world economic down turn. Thinking about that 30% of our products are exported, if the overseas consumers stop buying our products, which means 30% of the US workers will lose their jobs, and the rest of the 70% of US workers will lose their confidence about the future completely and will reduce their spendings significantly, this will reduce the economic activities here in the US to a dangerous level , and push the domestic economy into a big depression.