March 16, 2010

Sequentially, we expect the first scenario of an economic recovery and no incremental bank lending to play out (i.e. the money multiplier will not increase). In this scenario inflation will decline. Over time we look for the confidence in the system to return and banks to begin lending once again (i.e. the money multiplier will increase and the dollar will decline), at which time we look for the inflation rate to flare up.

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