Mike, I have two comments, the first has to do with Poole's point of view that inflation will rear its ugly head because of the rapid increase in Money supply. While not as learned as Mr. Poole by a mile or two or a thousand, I disagree with him completely. He is looking at the raw numbers and do not take into account the change in money velocity, which during the last 12 months has slowed drastically. A lot of what we print (in terms of greenbacks) is simply taken out of circulation (and completely out of the US economy) by the mattress filling citizenry in the Rim and Russia. There are no accurate numbers describing this phenomenon, but my "proof" while indirect, is, IMHO, flawless, the proof is in the CRB index which today broke through an extremely strong support level of 208, announcing to whomever is willing to listen that inflation for the foreseeable future is dead.
Another way to look at it, the greenbacks in circulation support not only our economy but an increasing portion of the world's economy, and that portion is increasing even more rapidly than the rate of increase in our money supply, thus effectively, there is too little money chasing too many goods, and thus we have disinflationary pressures (as the CRB indicates unequivocally).
By the way, apparently some people in some governments must be reading this thread of ours. Japan has just started an advertising campaign promoting consumption in Japan (my suggestion to mount an advertising campaign "the patriotic thing to do is go out and buy something").
As for the current "account deficit" and "trade deficit", I am not sure if the quarterly figure of $47 Billion you cited is the one or the other, our current rate of trade deficit is close to (but not there yet) to $45 billion per quarter, not a pretty picture, but a necessary one, if we are to help the rim to regain balance, but if Japan does not succeed in its consumption promotional effort, the situation will grow worse, and our ability to continue will be impacted.
Because we are so close to the number ($51-55 Billion in trade deficit per quarter)where weakness in our dollar sould stem the flow of imports, I do not think that the yen has much more weakness than my target of 156 yen/dollar in it (some "learned people are claiming that the yen will go to 276 yen/dollar, and i wonder what potion they are on). This leaves my general scenario for the rest of the year intact, topping in August followed by a "wobbly" period of a month to six weeks, and then a nasty decline in or about October.
Zeev
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