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To: Alex who wrote (30249)	3/17/1999 4:08:00 PM
From: long-gone	Respond to of 116759

<<<<"There should be no doubt in anybody's mind that inflation is a thing of the past." This is a quote in Monday's Wall Street Journal from an economics professor and former chief economist of a money center bank. This quote is reminiscent of that of another famous American economist, who, in 1929, said the U.S. economy was on a permanent plateau of prosperity.>> Alex, great post, in light of the action of late. Does anyone else remember those times of inflation? Fast food stocks boomed as did the oils. This time, I suspect the cycle of inflationary in petroleum price will be cut more than a bit short as we go more & more to the coming hydrogen fuel cell technology. This, though, will not break any basic rules of scarcity, but will rather affirm them. Around 2005 -9 the world's population will grow to the point as to outstrip any and all the current improvements in production of those commodities coming from natural resources.

To: Alex who wrote (30249)	3/19/1999 6:05:00 PM
From: Bill Murphy	Read Replies (2) \| Respond to of 116759

Change of Pace Headline- IMF Gold Sales in Doubt Le Metropole members, For the fifth day in a role, the propagators of IMF gold sales unleashed more commentary about this issue. This time IMF Managing Director Michel Camdessus announced that he welcomed U.S. support for sales of some IMF bullion reserves. "We shall support the sales of the gold of the IMF in spite of the opposition of the membership of IMF because I see the reduction of heavily indebted poor countries as of the great things to be done." We have already touched on the hypocrisy here and the obvious orchestration of press release announcements to demoralize the industry and "would be" gold buyers. However, there is some good news to report to you. I spoke today with the House Staff Director for the Joint Economic Committee. Your feedback on this issue and that of others is making a difference. The Treasury was not prepared for such vigorous objections to the IMF gold sale proposal. As was explained to me by the Congressional Staff Director, " the Treasury was a bit behind the curve" and did not have adequate answers to our arguments." "They became very quiet." Contrary to what the mainstream press is reporting to you, IMF gold sales are far from being a done deal. What we need to do is to find ways to get that message out to the investment community and the public to counter the barrage of negative talk about gold that prevails today. The wire services did not even send out this Press Release by the Joint Economic Committee, so we are presenting it to you: IMF REFORM IS AN ALTERNATIVE TO GOLD SALES WASHINGTON, D.C. –Legislation to enforce Congressional reforms of the International Monetary Fund (IMF) could finance its policy initiatives without gold sales, Congressman Jim Saxton said today. Saxton pointed out that if the IMF discontinued its policy of using heavily subsidized interest rates, additional funds would become available to the IMF that would strengthen its financial structure. "A key problem with the IMF is its use of deeply subsidized, below-market interest rates on most of its loans," Saxton said. "The standard IMF interest rate is below 4 percent, and even the alternative higher interest rate sometimes used by the IMF is also subsidized. Interest rates in the range of 4 to 7 percent for deeply distressed borrowers distort price signals, waste taxpayer money and tend to deepen existing moral hazard problems. "One effect of the gold sales proposal is to help the IMF provide debt relief without having to resort to the use of true market interest rates to increase cash flow. Congress should closely examine this proposal for gold sales in light of the Congressional IMF reform legislation intended to mandate the use of market interest rates in typical IMF bailouts. In the case of the Brazil bailout, for example, the IMF interest rates are still considerably below market interest rates. "The new IMF bill ready for introduction will pressure the IMF to comply with the reform legislation passed last fall by using true market interest rates in typical IMF bailouts. Unfortunately, there have been indications that the IMF and Treasury may not implement this legislation in line with Congressional intent. In my view, instead of minimizing the interest rate reform, the IMF should apply it much more broadly to all of its lending. "The issue of gold sales should also be viewed in the context of the IMF's financial structure. The IMF has very short-term liabilities and much longer-term assets. This maturity mismatch between the liabilities and assets on the IMF balance sheet undermines its liquidity. In addition, IMF loans are heavily concentrated among its 5 largest borrowers,lessening diversification and increasing risks. Furthermore, the IMF's use of interest rate subsidies promotes moral hazard and undermines its potential reserves, encourages complicated ad hoc measures to finance additional programs such as debt relief, and fosters a reliance on continual quota increases. Unqualified acceptance of the gold sale proposal would be viewed as an endorsement of these current IMF policies," Saxton concluded. For more information on the IMF, please visit the JEC website at www.house/gov/jec/. All the best, Bill Murphy Le Patron