"Dragon at the Back Door" (new article)
by Jim Willie CB
September 30, 2003
www.GoldenJackass.com
financialsense.com
an excerpt:
Phase #2 is when the real damage is done, when severely harmful effects are felt inside the US Economy, when the press & media are awakened from slumber, when the public outcry for government action is called for, when job loss accelerates, and when dim-witted (but politically favorable) official financial and executive decisions are made. In this more dangerous phase, watch for the USDollar and USTBonds to decline together, unlike in the initial phase. The dragon is at the back door, but few have noticed.
The primary characteristics of the damaging phase #2 will be many :
A) IMPORTED ASIAN PRODUCT PRICE INFLATION EFFECT
B) RISKS DUE TO ASIAN DEPENDENCE UPON CAPITAL AND MFG
C) ASIAN CENTRAL BANK RESERVE HEDGING RESPONSE
D) LAGGED FEDERAL RESERVE MONETARY EFFECT ON PRICE LEVELS
E) INCIPIENT TWO-SIDED PRICE INFLATION THREAT TO USTBONDS
F) LIKELY ERRORS WITHIN FED RESPONSE, DESPERATION SETS IN
G) MULTIPLICITY OF POSITIVE EFFECTS ON GOLD
I think this is a very timely article
later in the article, I mention Snow and his recent actions
In a most amazing field trip in mid-September, Treasury Secy Snow traveled to China for the expressed purpose of requesting that Chinese leaders raise the prices on their entire portfolio of exported products to the Untied States. Inept economists and workers alike harbor some deranged notion that a higher Yuan exchange rate will both reduce our bilateral trade gap and restore jobs. No such thing will occur. Instead, the trade gap will increase, even as imported products rise in price, signaling the arrival on price inflation. Over two decades of monetary inflation has been exported to Asia, which has paid for our federal deficits and trade gaps. The end result is that they now own significant portions of our entire debt structure. More importantly though, with the end of the USTBond bubble and the end of the Asian Central Bank defense of the highly overvalued USDollar, we have entered phase #2. We next import inflation. The rise of Asian imported product prices marks the beginning of the reversal of that monetary inflation export.
/ jim |
