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To: j g cordes who wrote (40313)	5/15/1999 11:38:00 AM
From: Tim Davies	Read Replies (2) \| Respond to of 120523

i think that a single currency might stabalize global growth patterns. the big issue in terms of any single economy growing or not seems to allso be afected by there liqudity ratio. ie how much of the money out there is backed by real deposits.

To: j g cordes who wrote (40313)	5/16/1999 8:12:00 PM
From: Tunica Albuginea	Read Replies (1) \| Respond to of 120523

jgcordes, "Wages are the primary culprit of inflation". In fact inflation is due to " too much money chasing too few goods ". So that wage levels are only inflationary if they do not correspond to increased goods produced/increased productivity.That has not been the case so far. Wages only account for 70% of the CPI. In the other 30% however oil is a great part off since it is in everything we make:" black gold ". An increase in oil prices may set off inflationary tendencies as the stock market tanks, higher wages are asked to make up for the decrease in market wealth but without a corresponding increase in productivity. These demands cannot be offset now by the tight labor pool which will thus worsen inflationary tendencies. I don't think the Fed will raise interest rates. However they will come out " for a bias to them ". That is not good for the market short or intermediate term, 6 months? On the other hand if they do nothing, that is even worse. Big tanking. I think it is bad either way. Can we start making a list of stocks to short tomorrow? <g> TA you said : My Reply to Kaltbaum and David Jones view on inflation.. exchange2000.com exchange2000.com Haven't wages stayed flat to down? Wages are the primary culprit of inflation. You're not going to knock down or regulate consumer price increases through Fed policy, only the market will do that through supply demand. As world economies come back on line there's going to be even more tenacious competition in production, driving down prices further. The last thing we need here is a higher cost of capital to compete with foreign cost structures. If the Fed starts to turn the screws you'll see consumers increasing their spending to get products before they go up in price.. that surge will later be interpreted as a need to further tighten. That's the cycle we need to avoid, as it chokes off the overall level of business activity in the mistaken belief that full employment and high capacity utilization are inflationary in and of themselves. They're not. We've had a liberal money supply pumping against last summers international defaults in currency including Asia and Russia, and it will continue as policy through y2k bankrun worries. This extra money pumped into the system to allow massive international dollar liquidity has provided much of the foder to inflate the US stock market. Liquidity will find a home of greatest appreciation. The stock market itself is the largest inflated asset, not wages, or commodities. Leverage is the greatest enemy of a market. When it works for you its great, when it works against you it creates overnight bankruptsies. Raising interest rates will pressure existing leveraged situations accelerating failures where they may have been worked out. The better cure is to tighten up on all conditions of leverage, not the cost of money. Send that off to Kaltbaum who's thinking, in my opinion, is out of the dark ages especially where he says.. "They need to show that the Fed is ahead of the game, that they're on top of things, not sitting idly by. Just a little tinkering to say, 'Hey, we're standing by, making sure everything's OK." That's like saying a police chief has to shoot someone in the community every once in awhile just to let them know they have guns.