Stock-chart overlays almost invariably stop working when we have them called to our attention in an e-mail, but it must be conceded that S&P 500 does look to be closely following a trail blazed by the Nikkei 225. If the coincident patterns continue, it would imply that the U.S. bear rally begun in November is just starting to get airborne. Click here  to see the comparison.

From Theodore Dalrymple, writing in City Journal, an eloquent and insightful essay about how an age of loose money not only destroys savings, but also corrodes character.  Click here   for the full essay. An excerpt:

“But asset inflation—ultimately, the debasement of the currency—as the principal source of wealth corrodes the character of people. It not only undermines the traditional bourgeois virtues but makes them ridiculous and even reverses them. Prudence becomes imprudence, thrift becomes improvidence, sobriety becomes mean-spiritedness, modesty becomes lack of ambition, self-control becomes betrayal of the inner self, patience becomes lack of foresight, steadiness becomes inflexibility: all that was wisdom becomes foolishness. And circumstances force almost everyone to join in the dance.”

Jeffrey Rogers Hummel has written one of the most provocative and insightful essays I have read concerning why the U.S. is more likely to default than attempt to hyperinflate Treasury debt into insignificance.  Click here  to access the essay. Here’s an excerpt:

“It is not literally impossible that the Federal Reserve could unleash the Zimbabwe option and repudiate the national debt indirectly through hyperinflation, rather than have the Treasury repudiate it directly. But my guess is that, faced with the alternatives of seeing both the dollar and the debt become worthless or defaulting on the debt while saving the dollar, the U.S. government will choose the latter. Treasury securities are second-order claims to central-bank-issued dollars. Although both may be ultimately backed by the power of taxation, that in no way prevents government from discriminating between the priority of the claims. After the American Revolution, the United States repudiated its paper money and yet successfully honored its debt (in gold). It is true that fiat money, as opposed to a gold standard, makes it harder to separate the fate of a government’s money from that of its debt. But Russia in 1998 is just one recent example of a government choosing partial debt repudiation over a complete collapse of its fiat currency.”