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Welcome to the "Wolf Creek Pass" School of Monetary Policy

I don’t know if you folks remember that hit ditty: a humorous tune about two truckers attempting to manhandle an out-of-control 1948 Peterbilt down the “other side” of Wolf Creek Pass – a death-taunting section of U.S. Highway 160 where the elevation drops a hefty 5,000 feet in a relatively short distance.

The song’s two characters – a truck driver named Earl and his brother, who’s his partner as well as the song’s narrator – are taking a flatbed load of chickens on a speedy trip down this winding, two-lane Colorado highway. After the narrator gives Earl the above-mentioned warning, the ancient semi’s brakes fail.

From there on down, the narrator tells us that the brothers’ trip “just wasn’t real pretty.” The truck careened around hairpins and switchbacks, and then raced at an uncontrolled 110 mph toward a tunnel with “clearance to the 12-foot line” – with chicken crates sadly “stacked to 13-9.”

The drivers and the runaway Peterbilt “went down and around and around and down ’til we run outta ground at the edge of town… and bashed into the side of the feed store – in downtown Pagosa Springs.”

Believe it or not, I started thinking about this funny old country tune the other night – right after I’d read a piece about QE3 and the U.S. Federal Reserve.

As zany as it first sounds, the parallels are striking.

  • Featured Story

    Are Japanese Stocks a "Buy" with the Nikkei on the Rise?

    Country Japan sushi small

    Anyone invested in Japanese stocks took notice when the country's minister of state for economic and fiscal policy, Akira Amari, said at a Yokohama meeting that he hopes the government takes steps to push shares of the Nikkei 225 up about 17% to 13,000.

    "I would like the government to take successive steps to push share prices higher,"Amari said Saturday. "Higher share prices work to improve corporate earnings. It is important for the government to show that it will work hard to aim at having the [Nikkei 225] index hit 13,000 by the end of the fiscal year in March."

    Amari also noted the Nikkei was up more than 2,000 points since former Prime Minister Yoshihiko Noda announced the dissolution of the Diet in November. In fact, the Nikkei 225 Stock Averagelast week closed at its highest since September 2008 after a 12-week advance that was the longest such streak since 1959, according to Nikkei Inc.

    Articles in the English-language press misidentified Amari as minister of finance - a position held by former Prime Minister Taro Aso - making the comments seem more like official government policy.

    Of course, no one in the government of Prime Minister Shinzo Abe will be upset if Amari turns out to be correct. Higher share prices are good for the economy and for achieving the government's aim of ending the deflationary spiral in Japan - and good for anyone who owns Japanese stocks.

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  • japanese stocks undervalued

  • Japanese Stocks Are Up, But Don't Fall for the Trap Japanese stocks hit a new 2012 high today (Wednesday) and the yen weakened to a 20-month low against the U.S. dollar as Shinzo Abe was installed as Japan's 96th prime minister.

    Abe, who served as prime minister in 2006-2007 but stepped down due to health issues, has vowed to pursue aggressive monetary easing to end deflation and get the Japanese economy growing again.

    But the long-term implications of Abe's policies aren't as rosy as the short-term stocks boost.

    "The hope is that Abe's promises of fresh stimulus, unlimited spending and placing a priority on domestic infrastructure will be the elixir that restores Japan's global muscle," said Money Morning Chief Investment Strategist Keith Fitz-Gerald. "As a veteran global trader who actually lives in Japan part time each year, and who has for the last 20+ years, let me make a counterpoint with particular force -don't fall for it."

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