Kirby's Blast From the Past.

Read this article. Thought I share with everyone here.

A BLAST FROM THE PAST AND MORE

Former Fed Chairman Alan Greenspan had a few “choice” words for his Russian counterparts late last week when he warned them that their refusal to allow the Ruble to meaningfully appreciate against the dollar may have inflationary consequences.

Greenspan Warns
Russian Authorities Against Investing in U.S. Dollar
Created: 20.10.2006 12:52 MSK (GMT +3),
Updated: 15:43 MSK
MosNewsRussia should be wary about the inflationary impact of buying U.S. dollars to insulate its economy from an influx of foreign earnings from oil exports, former Federal Reserve Chairman
Alan Greenspan said on Thursday, Oct. 19.

Tulips Come To Mind...

Greenspan went on to point out that Russia’s massive Trade Surplus – owing to 600 million per day in oil revenue – [implied] should naturally lead to a rising domestic currency as petrodollars are repatriated – an event or process dubbed “Dutch
Disease.”

Dutch Disease refers to the potential negative long-term impact of one explosive sector —- oil, in the case of Russia —- which boosts the value of the currency, making locally produced goods less competitive compared to foreign goods.

He warned that artificially depressing their currency to cure “Dutch Disease” – by buying foreign currencies like dollars - could lead to inflationary problems down the road.

The Russian Central Bank has intervened in the foreign exchange market by buying U.S. dollars to slow the ruble’s growth. The move, however, fuelled money supply growth of about 45 percent and inflation of around 10.9 percent in 2005.

Wow, money supply growth of 45%. That sure sounds inflationary, doesn’t it? Me wonders whether that 45% growth rate refers to the Russian equivalent of M3? That would be the very same measure of money supply that Sir Alan banished in the U.S. - as one of his last official acts as Chairman of the Federal Reserve – isn’t it?

Anyhow, Greenspan goes on to “speculate” about the Ruble’s future prospects as a “potential” Reserve Currency – and he points out how important the “rule of law” is – as a fundamental precondition for such an occurrence. Me wonders, again, speaking of rules in law - if he might be referring to such fundamental things as “habeas corpus” – an inalienable, basic human right since the 12th century that the U.S. recently discarded. Who knows, Greenspan always did have a way with words – didn’t he?