Balancing Inflation and Growth Part 7 of 13

At the same time, I am fully aware that the FOMC must be careful to not undermine that recuperative process. Here, of course, I refer to the potential harm to the consumer and the business and future trading software financial sectors alike by unwittingly allowing the perception to take hold that, as the New York Times editorialized in its lead front page article last Thursday, the Federal Reserve, signaled its readiness to bolster the economy with cheaper money even though inflation is picking up speed.

Talk of cheap money makes my skin crawl. The words imply a debased currency and inflation and the harsh medicine that inevitably must be administered to purge it. So you should not be surprised that I consider the perception that the Fed is pursuing a cheap-money strategy and commodity trading education, should it take root, to be a paramount risk to the long-term welfare of the U.S. economy.

I believe the Times overstates its case. Chairman Bernanke made clear in his congressional testimony last week that we are monitoring inflationary pressures and expectations closely. And yet, I understand the source of the Times sentiment. In a globalized capital market where money is free to move anywhere it pleases, there is scant tolerance for even the slightest whiff of inflation. Since the January FOMC meeting, longer-term rates, including those on fixed mortgages, have risen rather than followed the federal funds rate downward.

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Balancing Inflation and Growth Part 12 of 13

As a result, trade in services is one of the most rapidly growing components of global trade. Thus, even the available supply of architects or petroleum engineers or software designers or medical technicians or lawyers or commodity trading broker must increasingly be considered in the context of global rather than domestic demand.

The point is that, at present, we simply do not have the ability to adequately account for the impact globalization has on the gearing commodity trading account of our domestic economy. Absent that capacity, we cannot, in my opinion, confidently assume that slower U.S. economic growth will quell U.S. inflation and, more important, keep inflationary expectations anchored. Containing inflation is the purpose of the ship I crew for, and if a temporary economic slowdown is what we must endure while we achieve that purpose, then it is, in my opinion, a burden we must bear, however politically inconvenient.

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Balancing Inflation and Growth Part 5 of 13

Some argue it is the slowing economy. Even if you foresee the most likely U.S. scenario as a period of flat growth for a few quarters, followed later in the year by a return to potential growth of about 3 percent, one cannot help but worry about whether the so-called tail risk commodity trading companies the odds of the worst-case scenario on the growth distribution curve unfoldingis getting fatter as the inventory of unsold homes continues to swell, consumers sense of wealth and businesses confidence erodes, and the solicitous bankers that used to court them become more coy.

Yet, the worst-case scenario remains very much a tail risk. As Chairman Bernanke noted in testimony before Congress last week, the nonfinancial sector has held up reasonably well and continues to expand. Employment growth is weakening and consumer confidence is sagging, but inventories and other indicators remain constructive. You can see evidence of this in the fourth quarters corporate performance. Thomson Financial reported last week that own 22 percent for the 462 S&P 500 companies that have so far released their numbers for the quarter. But strip out the financial institutions, and earnings were up 12 percent, and 62 percent of those 462 companies reported earnings that topped analysts expectations. In all, that is not bad when you consider the beating the financials have taken and how stocks of housing and housing-related companies have been pummeled.

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Balancing Inflation and Growth Part 3 of 13

Indeed, as I speak, central bankers here and across both the pond and the channel feel besieged by a seemingly insurmountable foe delivering retribution for our having been complacent, if not smug, during those happier days. Like Henrys troops at Agincourt, it may appear that we face overwhelming odds. Yet I am not overwhelmed.

Why not, you ask? How to trade commodities allows me to invoke another of your English ancestors in reply. Winston Churchill once asked: Why is it that the ship beats the waves, when they are so many and the ship is one? The reason is that the ship has a purpose. Tonight, I wish to give my view of the purpose of the Federal Reserve.

Needless to say but I will say so any way the views commodity market trading I express this evening will be my own and not those of any other member of the Federal Open Market Committee or any official of the Federal Reserve System. This is but one mans soliloquy.

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