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To: Cynic 2005 who wrote (8885)	10/18/1998 10:26:00 PM
From: Joseph G.	Respond to of 86076

IMO it will turn out that the Easy Al cuts will just export deflation to Europe, and accelerate it further in Japan - which is exactly opposite of what he should try to achieve. History teaches that there are globally deflationary times, and inflationary times. Just like during inflationary times in the 70's currency devaluation induced more inflation in devaluating country, without helping others, in deflationary times rate cuts and devaluations export deflation to other countries, without helping the cutting country. That was the case historically, and that is what happened after Japan cut its rates, and after Asean countries devalued. The whole world is deflating (because of overcapacity relative to consumption), and cutting rates and / or devaluing in some countries just shifts the burden around, and eventually it comes back. The correct monetary policy is to stay put, and not to destabilize the system further by abrupt changes.