Ok... On of my fave reads each day is the Daily Reckoning, by Bill Bonner... (http://www.dailyreckoning.com) Yesterday, Bill was talking about Money Supply, and how the U.S. has really been turning the crank on the printing press lately... Let's tune in to something Bill said that I thought played well with our daily talks... Here's Bill...
"American emissions of paper money cause a kind of chain reaction of debasement. No country wants to see its own currency fall faster than the dollar - and especially not America's major suppliers. (We used to refer to them as 'trading partners,' but the term seems sadly out of date, since the trade is almost only in one direction). The dollar-receiving countries rev up their own printing presses...layering various colors of ink onto sturdy pieces of paper so that they may use it to buy America's currency.
Result #1: more paper money everywhere. Result #2: lower interest rates Result #3: huge liquidity boom. Result #4: big run-up in asset prices...m&a activity...global bubbles some clown pays $71 million for a Warhol,
Surely there is a Result #5.
What? At the very least, it will be - as Mr. Greenspan suggests - a correction full of drama in the most affected markets. At the very worst, it will be something that mimics the four horsemen of the Apocalypse: worldwide depression, revolutions, wars and rumors of wars."
OK... I can't end a week, and begin a Memorial Day weekend with a depressing note! Let's see, where is a "feel good" story that I can pull out of Bullwinkle's hat?
Swiss National Bank President, Roth, was warning the markets yesterday about inflation, and how the Swiss franc should be stronger based on fundamentals to help fight inflation... I doubt the markets listened, or that Roth was even on their radar screens... But I think he was setting the markets up for a rate hike. Higher interest rates in Switzerland could put the kyboshes on using the franc and a funding currency for the carry trade!
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