From: Rakesh Bhandari (rakeshb@STANFORD.EDU)
Date: Tue May 13 2003 - 15:02:21 EDT
Andy, I should clarify that I was referring to you someone who has thought long and hard about these questions. Thank you for your expectedly stimulating reply--I do appreciate and find myself sympathetic with the general thrust of your arguments; Paul C's and Jurriaan's replies are also very helpful. I owe Michael Eldred a response on the question of tribute raised by Arrighi. I had expected a couple of years ago that a rapidly falling dollar wouldn't thwart the flows of foreign investment into the US, especially Treasury and corporate bonds. Rather than interest rates rising as foreigners demand bigger rewards with the dollar falling rapidly, long term interest rates in the US bond bond market have actually declined--see today's WSJ, p. A10 This even surprises me. Is the US being rewarded for inflating away its debt? It does seem to me the markets must have the confidence that the US can secure the cooperation of foreign central banks in controlling and limiting the devaluation of the dollar. Perhaps all these movements can be explained without reference to political interference in the markets? I don't think so. Yours, Rakesh
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