Top Gun

My 2010 Market Predictions

Very nice. I feel much the same. A main item is that Fed can indeed control rates by returning bonds to the market and sucking out cash, just as was done by Treasury with removing TARP from several institutions. With several trillion to work with, short term rates can stay low while long term rise. Deficit will be a risk, if bond holders perceive indefinite deficits, 10yr bond will go to 6%+, which could be a problem.

The Curious Case of the U.S. Dollar

Dollar index is relative. The other index members are hurt badly. Gold does well in all currencies.

M1/M2 increase without a decrease in the dollar shows just how big M3 had gotten - either M3 collapses or M1/2 grows to fill it with real $ until velocity restarts. If previous administration hadn't stopped publishing M3, I firmly believe all this mess would have been avoided by prudent investors understanding their risks.

Economic Anomalies Explained

I agree with all of your analysis.

The FACTS are that we left the Clinton years with a $120B surplus, and now are in disaster. The first treasury sec. wanted to devalue the dollar to help US manufacturing, of which there is none.

This admin allowed the levering of 5 investment banks way beyond what a commercial bank could do. The leverage was used to make bubbles, not produce economic value. Hence we are messed up.

The dollar is high because we sent the rest of the world into a tail spin, no other reason.

At best we will have a long, slow road back, engineered by very good Fed and Treasury secs.

I look today and don't see that the word investment has any meaning at all. Time to look for a small business, I guess.