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

To: russwinter who wrote (64763)	6/28/2006 4:43:28 PM
From: UncleBigs	Read Replies (2) \| Respond to of 110194

I think foreign capital flows are not predominate in the Fed's mind. The Fed is 100% Bush appointees. At their core, they are political. They want higher stock prices, a lower dollar, and continued asset inflation. Any funding gaps that develop can be made up with coupon passes, mysterious offshore entities, buying more treasury issues through the soma. I think they view a lower dollar as a critical component to the eventual re-balancing. The last thing they want is a stronger dollar and asset deflation. If housing and the stock market decline drastically at this point, Bernanke will get the blame for going too far. The Fed has no good choices right now. I think they will blink at this meeting. They want the soft landing. They don't want to try to resuscitate a dead economy. I take Bernanke at his word. He told Congress a pause is coming even if inflation is not entirely under control due to the lag effects of prior fed hikes. I believe him.