BURN FIAT BURN

Runaway inflation? NO WAY ?

WE have tons of excess capacity and a need to keep consumers buying, will higher prices do that?

I buy Chinese desks and chairs and have had NO price increases or gas surcharges. BDI has been declining sharply

Are we getting to the preverbial "you can lead a horse to water, but Cant make him drink?" they can keep printing money but the velocity of such and demand is falling....consumer loans have declined near first time in how many years 2 months in row.

However as I Just post this I went here http://research.stlouisfed.org/publications/usfd/page3.pdf SOB!!!!!! what a HUGE LEAP from last week OMG!!! This is crisis proportions my friends

From Noland (prudentbear.com)

January 15 – Market News International: “China’s foreign exchange reserves rose 34% to $818.9 bln last year, as massive amounts of foreign direct investment, export earnings and ‘hot money’ chasing currency appreciation continued to pour into the country.

January 18 – Associated Press (Scott Sonner): “‘Right now, the rest of the world owns $3 trillion more of us than we own of them,’ (Warren) Buffett told business students and faculty Tuesday at the University of Nevada, Reno. “In my view, it will create political turmoil at some point. ... Pretty soon, I think there will be a big adjustment…’

Broad money supply (M3) declined $23.2 billion (week of Jan. 9) to $10.244 Trillion. Over the past 34 weeks, M3 has inflated $619 billion, or 9.8% annualized. (SO money supply is a TRICKY definition to understand as we compare M3 with VELOCITY (MZM) and ADJ base

Noland feels demand for Chinese product will grow as consumers pick up spending and Katrina spending.

WILL OUTCRY from GOV spending and waste LEAD to CUTBACKS in such which cancel out Katrina spending? Maybe so.

AS gold and OIL have risen so have stocks….ASSET inflation along with housing……..if housing declines maybe so will all kinds of related SPENDING depressing demand for all kinds of things.

ANY SHARP fall in gold I will take as a VERY bad sign and expect other commodities and assets to follow.

Fri was opex fri, so strange things happen, like 200 pt whiff. I thing major damage done, let's see how mkt acts next week

D