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Strategies & Market Trends : Bonds, Currencies, Commodities and Index Futures -- Ignore unavailable to you. Want to Upgrade?

To: Rarebird who wrote (10100)	3/8/2006 9:04:13 AM
From: robert b furman	Read Replies (1) \| Respond to of 12410

Hi Rarebird, I don't disagree with your premise. I too believe that the missing 6.3% deficit in GDP will be monetized. Greenspan warned that no one could afford to do this. That being keep your currency artificially low and forever enjoying a current account deficit that gets dumped into Treasuries by the central banks. The parking of money made,as the resuly of artificially low currencies supporting a countries manufacturing sector,has been allowed to perpetuate itself as central bankers pour these ill got gains back into treasuries. Greenspan warned Japan for decades that it would be expensive to defend the yen cheapness,and they gladly spent the money. I suspect the monetization of the trade deficit,to a partial degree, will occur.Central Banks wil continue to buy Treasuries,the status quo will be kicked down the road for quite some time. Ultimately,the developing manufacturing nations must reinvest these deficits earnings into their own country as the middle classes demand it and those internal markets grow and make infrastructure demands of their own. Then there is India and Africa that will emerge for continuous competition on keeping the lid on inflation from the manufacturing side. It is a long continuum plan of global development,that doesn't necessarily end up in an inflation hyperend. It will be contained and pressurized. I do believe/hope the dollar will decline and become more equal to artificially cheap currencies,as China and others need the technology we've developed for infrastructure/environmentalism. This could well bring a more even trade GDP imbalance and allow all currencies to float on the market vs just peg some as so cheap,no one else can get there. It is a set up for huge market pressures - not all of which have such dire consequences as your Armagedon proclamations inject.IMO Bob P.S. I like your dialogue here - it is a challenging scenario to anticipate. Pardon my tempered optimism that free markets are always force to be reckoned with.