The Epic American Credit and Bond Bubble Laboratory Message Board

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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: NOW who wrote (78448)	2/4/2007 12:35:39 PM
From: Tommaso	Read Replies (1) of 110194

I get email notices every time the St. Louis Fed issues a new number of their publications, and I look at them all. To me, it appears that the Fed is starting to monetize the debt at an accelerating rate, possibly because of a declining foreign demand for U. S. treasury bonds. As I understand it, the Fed feels obligated to help in keeping the market for these bonds liquid and to forestall a failed auction. If this continues (and how cannot it not continue?), it means a declining value for the U. S. dollar and that means, by definition, price and eventually wage inflation. Right now, the price of both oil and gold fluctuates almost perfectly as the inverse of the value of the dollar. I once knew a physicist who called economics "a firm grasp of the obvious." I never was quite sure if he meant to praise or insult economists by saying that--or just thought it was an objective description. It seems to me obvious that with a fiat currency and with a government borrowing from other countries with total irresponsibility (to pay for a pointless military occupation), we are doomed to endure at least a decade of serious inflation.

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