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

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To: bart13 who wrote (93548)	4/14/2008 8:49:09 PM
From: Keith Feral	Read Replies (2) of 110194

It's so interesting that everyone is getting pulled into the great belief a lower dollar is causing inflation. I wonder how many people in the food riots outside the US are blaming the lower dollar. Probably not too many. We like to keep blaming ourselves for the massive increase in global demand for commodities in ag and energy. To me it's a simple supply and demand curve that is destined to keep growing higher. I think that's why Europe needs to reflect on the root cause of high energy prices in Europe - 50% taxes on oil. I heard a lot of people talking about shorting the pound and euro if they have to start cutting rates. BOE has already made a few small cuts, but more people are starting to think that Europe has to follow through with rate cuts sooner rather than later. The question is whether they will wait until it's too late to do any good. The greatest problem with our policy makers is that they are totally unwilling to encourage coal to liquid, alternative energy, or anything that might reduce our dependence on foreign crude. None of our offshore market has been tapped for any oil outside of limited parts of the gom. Brazil seems to be finding quite a bit of oil off their coast. God only knows how much oil we have off our coastlines. I think the key to the ongoing debate between the dollar and the commodities may be resolved by the clear recognition that this economy needs massive monetary stimulus to get things rolling again. Only 2 things can kill economic growth - high taxes and high interest rates. The FED has done a terrible job micromanaging inflation for so long that our economic growth has stumbled along the way. Now, we are just beginning to apply some intelligence and common sense to our national energy policy, even though it has not been well thought out. Obviously, we can't have wind turbines keeping neighbors up at night, and these projects have to be thought out with careful review. (I read about a small Kansas town being terrorized by windmills on another thread.) I don't see the problem with new jobs and economic growth so much as where are we going to get all the capital to rebuild the infrastructure.

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