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

To: Hawkmoon who wrote (26423)	1/18/1999 5:53:00 PM
From: baystock	Read Replies (1) \| Respond to of 116873

<<We've been seeing deflation for the past two years as other economies devalue their currencies (inflationary for them), which makes their goods cheaper here in the US deflationary for us... or at least dis-inflationary). Only due to the Fed adding liquidity through increasing money supply and lowering the Fed Funds and Discount rates has deflation been kept in check and the US economy stronger than it should be.>> Ron, you are contradicting yourself, as you yourself realized. Yes we have had disinflation in the past, but we donot yet have deflation (negative inflation rate). Once you have low inflation under 2% as we have had last couple of years you can no longer really have any more disinflation (ie. decreasing inflation) without it turning into deflation. I lean more towards rarebird's thesis of stagflation more than deflation. The federal reserve I am sure understands all these global financial problems you mention and is free to opt for reflation now that the US dollar is no longer linked to gold. They would much rather have stagflation than deflation if they could choose, since IMO deflation is much more damaging than inflation. All the other busted economies of late have chosen the path of reflation, why shouldn't the US do the same ? Ram