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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: John Vosilla who wrote (54796)	2/27/2006 11:09:34 AM
From: GST	Read Replies (1) \| Respond to of 110194

Bernake is likely to take a global view -- to see his job as central banker to the world. The US is becoming a 'rich' suburb of Asia. He will maintain a relatively loose policy to the extent that this will fuel global growth. He will tighten to the extent that he needs to reduce the consumption role of the US economy in the global economy. He will drive short term rates up to squeeze the US consumer. This will dampen US demand, slow the foreign accumulation of US dollars via current account imbalances and cause long term rates to rise and the dollar to fall. But on balance, he will want to see plenty of dollars out there greasing the skids of global business. And he will tolerate inflation to a degree not seen (or at least not acknowledged), in recent years as a way of defaulting on impossible levels of US indebtedness to foreigners and future generations of Americans. We will have global growth and US stagflation in a rapidly growing global economy.