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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Mark Adams who wrote (45954)	2/6/1999 3:00:00 PM
From: Knighty Tin	Read Replies (1) \| Respond to of 132070

Mark, Velocity is increased by the presence of money funds and govt. hedge funds such as Freddie Mac and Fannie Mae. These numbers are not usually factored into standard velocity calculations, but they are huge in this economy. The buck is down against the other major world currency, the Yen, by about 30% in the last year. So, it isn't like devaluation is about to happen. It has happened. Just not against all currencies. Yet. And Japan holds more dollar assets than nearly the rest of the world put together. What you have is a consumer on speed, huge debt creation at corporations and households, and a phony wealth effect all caused by excess money supply and frantic velocity. It started paying negative long term returns several months ago. And, as there is usually a 12-18 month lag between reckless Fed behavior and disaster in the real world, my guess is there is much more to come. MB