OK, OK, I said I would get off this kick but I have to put in this short note before we move on to other things...and this time I REALLY promise that we will start tomorrow.
The headline will be markets slump as investors flee to quality. As part of the discussion, the dollar.Yen relationship will be mentioned in the sense that the dollar continues to slump against the Yen which terrifies everyone. Why is the Yen so strong? Not a clue and you will not find the answer in any of the reports and it is precisely this phenomenon that is scaring people, because you see, the Yen, with all of the QE activity of the B of J piled onto negative interest rates the Yen is supposed to weaken. OK, you say, so what? Well, a strong Yen does nothing for the Japanese economy; inflation stays low and exports go down. But we've gone through this before, haven't we? Yep, but times are a bit different. You see, everybody (the Central Banks) is, in one way or another trying the same thing. And slowly, but with increasing frequency, people are beginning to ask if they have gotten the whole thing wrong. That perhaps--just perhaps--the result will not be economic stimulus and higher inflation but stagflation, and that is not a very good thing at all particularly when both the public and private sectors are up to their eyeballs in debt. It is a very bad place indeed,which, by the by, has been what this has been all about. Preventing the world from getting there.
But all is not lost. Tomorrow, we will discuss how Argentina is poised to save us all. $12,500,000,000 coming next week. Get your check books out guys. Can't miss this one. It's your duty.
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