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In the runup to an election in the States one would presume that Greenspan will hold the course straight and not allow the ship to sink. This is correct reasoning, as you look at the MZM money supply scenario, it is being held in neutral by the Fed's at 7.5%.

However, a word of caution in that their are systematic risks which could sink the ship. The USD is too strong a currency at the present time and the deflationary pressures applied to other currencies, in particular the Euro and Yen (plus the currencies within a currency the Deutchesmark, Franc and Lire) mean that these countries will attempt to strengthen their currency by increasing rates. However inflation is dormant or very low in these countries and any increase in rates and tightening bias on their economies could trip up the States and in particular the equities markets.

Interest rates have to rise in the States (Inflation in the CPI, PPI plus increase in wage growth) so herein is a continuing spiral effect on the currencies external! You could have a serious development in that Bonds continue to rise and in so doing will trigger an equities collapse.

Care therefore in investing as to pick the top or bottom in any markets, can only be determined after the events.
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