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Politics : Ask Michael Burke
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To: Mike M2 who wrote (52024)3/17/1999 8:25:00 AM
From: valueminded  Read Replies (1) of 132070
 
Mike/Others

Couple of errors in your arguement. Since the Dollar is the Defacto standard of world trade - and has much more faith than anything else out there, We can print and make available as much as we want knowing that the world will absorb it. Latin america can not do that nor could Germany in the late 20's. Since we are the economy of size and control the currency standard for the world, we are in the drivers seat. So for now, expect the stock market to climb and climb big as AG foments the bubble. (imo) Now will this eventually catch up to us - no question - and what will the FED be able to do then - nothing except watch it crash as they did in the 30's and as Japan is still doing today. One thing they will have learned from Japan is that once the bubble has popped, take your lumps - ie keep interest rates up their and purge the excesses. It is obvious that Japans clueless use of monetary stimulants is just driving them further into the abyss.

So my opinion is that we continue to decouple from the rest of the world. It is in our best interest to have them stink (ie very strong dollar) so they can finance our trade deficits among other things. I do not see a problem for us until the rest of the world recovers. At that point, we will have so many dollars out there that we will have to adjust (read double digit inflation) no matter what the trend is. I would expect recession with inflation as the natural consequence. Since to a large extent, the recovery depends on decisive action by Japan, I wouldn't look for it anytime soon.

just my opinion
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