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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: bart13 who wrote (75581)12/14/2006 11:00:10 AM
From: GST  Read Replies (2) of 110194
 
I refused nothing Bart. US inflation in a global economy is about what a dollar will buy -- when it buys less we have inflation when it buys more we have deflation. At a minimum the dollar is influenced by the current account deficit, accumulated foreign indebtedness, monetary and fiscal policy, the savings rates in different countries, and relative gdp growth. Monetary policy is important but it is only one factor. At this moment in our economic history it is overshadowed by other factors. If the US economy slows the dollar is set to fall and prices are set to rise -- the price of goods, the price of services and the price of foreign sourced savings (debt to us). Neither an increase or decrease in money supply from the Fed will stop prices from rising under these circumstances. A sharp increase in money supply from the Fed would indeed do little more than add fuel to the fire.
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