Here is a running chat I've had with this reader. I wish I had more time for this.

Bill, the money supply of the Yen may exceed that of the dollar, but it represents savings, it's been sterilized, and a lot of it is parked in US treasuries. /A

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A: I agree. It was part of the foreign carry trade. And now that Japan's real estate market is heating up, those trades are unwinding, to the detriment of US Bonds and the USD. Bernanke cannot stop the flood without $1,000 gold, maybe higher. /B

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Bill, the carry trade was not only Japanese citizens, but US hedge funds, which would get killed in THEIR portion of the total carry trade.

I think the unwinding of the carry trade has started and it is not good for the outlook for the US dollar. If Bernanke counters with a hawkish stance when he raises rates by 25 basis points, it might help temporarily, but its bad news for the US economy, stocks, bonds, and real estate. If recession hits, then the dollar is going down at any hint of easing.

Bill, in the early 1970's gold ranged in price between $100 to $200 US . Land in the US has gone up in excess of 20 fold since then. A conservative, fair price for gold without a recession is 20 times $100 US or $2000 US. /A

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A: Again, I agree. /Bill