[Iris7]

Lot of smart guys thinking about this one.

The most important reality here is that the Government does not need to tax or borrow money in order to spend it. Just takes writing credits into the books. Even very large increases in the money supply caused by simply issuing checks and currency can be managed by interest rate manipulation.

The worst that can happen is a drop in the value of the dollar versus other currencies. Exchange controls will stop capital flight. The rotating bubble continues, where it will stop nobody knows.

[AndyJackson]

The worst that can happen is a drop in the value of the dollar versus other currencies.

No that is not the worst that can happen by a long shot. Whether the worst that can happen will is another issue, but right now a lot of folks think that they are worth a lot of money based on liquidity in real estate pumped in by these mortgage institutions.

[TigerLikesRooster]

Re #3

What surprised me was the pace of portfolio growth. On the other hand, money supply is growing on a comparable pace. So maybe I shouldn't be so surprised.

By the way, I am glad to see that you know a lot about China. Your observation on S. Chinese attitude on the North is interesting. It is probably the extension of traditional Southern Chinese mentality which view themselves as more cultured and business-oriented.

Thanks for sharing your views.