No. of Recommendations: 1
And, don't forget, both stocks and bonds are now heavily dependent on foreign investment, and a weak dollar doesn't help.

I saw a comment on the tube in the past couple of weeks that one of the biggest problems in dealing with the current problem is that the USD has slid so much against the Euro. Lowering the funds rate (and probably more on the discount rate to stimulate inter-bank lending) will tend to push the dollar down more. The question is: what happens to the long bond if the ROW (Rest Of World) decides they've had enough of US inflation? Do interest rates go down for a few months, then skyrocket when there's trouble with the next long bond auction? That's kinda my feeling, but I'm not willing to bet money on it.

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