Right On, Mr. Duncan

"The amount of new yen that Japan 'printed' and converted into dollars during January 2004 alone was enough to finance 13 per cent of the US budget deficit," points out our friend Richard Duncan, author of Dollar Crises: Causes, Consequences, Cures. Duncan's point? While all eyes in the financial media are focused on profligate spending by the Bush administration and historic low rates set by the US Fed, Japan is still taking the cake when it comes to government intervention in the markets. "By accident or by design," Duncan notes in an op ed in the Financial Times, "Japan is carrying out the most audacious endeavour to conjure wealth out of nothing since John Law sold shares in the Mississippi Company in 1720." Duncan: In mid-2003, economists at the US Federal Reserve published a paper explaining why the Fed was not "out of bullets" despite having cut short-term interest rates to 1 per cent. That paper stated that 'the Fed could even implement what is essentially the classic textbook policy of dropping freshly printed money from a helicopter,' if necessary, to stimulate the economy. Today, that helicopter is in the air. But, strangely, it is not the Stars and Stripes that is painted on its side, but rather the Rising Sun. That much is clear. What still is not quite discernible, however, is who is actually in the pilot's seat. Better yet, can it be piloted at all?