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  • From: Lisa Perry <lkvp AT floydva.net>
  • To: homestead AT lists.ibiblio.org
  • Subject: Re: [Homestead] 4 years later ...
  • Date: Wed, 01 Dec 2004 12:26:19 -0500

Don Bowen wrote:

China has refused to revalue its currency. This take away most of the advantage of a dropping currency. Huge trade deficients with china are increasing the worry of world wide investors upon which we depend on for more than 43% of our bond sales. Tax cuts have made us noted less valuable to american wealthy and huge trade and budget deficients have made those same bonds less valuable to foreign investors.

The net result can lead to inflation. A definite cooling of the economy will occur as interest rates climb. But unless interest rates climb more will pass on US securities.

I've read the administration wouldn't mind the dollar falling further to help ease trade deficits, but it's a double-edge sword. If the dollar falls much further, how long will foreign investors continue to hold dollars that earn less on their investment? I've read we're going to have a problem no matter what, and what remains to be seen is whether it's an abrupt jump over a cliff, or whether it's a gentler and steady tumble down a long hill. Brought to mind a twisted version of Jack and Jill going up the hill carrying the pail of water. Japan and China have much control over our fate.

Am I being too negative?





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