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The Impact of Thin-Air Money

Saturday, October 16, 2010, 11:52 AM
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This past week was a wild one.  Gold and silver broke out to new highs, the dollar weakened, China's grumblings about the dollar's value took on new urgency, and the Dow held at over 11,000 (although another $4.69 billion thin-air money injection on Friday might have helped some).

How do we make sense of all this?

Unfortunately there are no compelling fundamental reasons to support what we are seeing unless you consider thin-air money printing, or the promise thereof, to be a fundamental driver.  While I understand how the various Wall Street gamers can consider front-running new Federal Reserve monetary excesses by piling into risk assets, trying to participate in such activities is raw speculation at best, and blind gambling at worst.

 

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