Give Me V

Pity the noble swine. The animal that is always one step from going feral on us before it becomes breakfast was the focus of the great debate between Johnny Carson and Ed McMahon. Which is smarter, the pig or the horse?

The horse, Ed averred, was the obvious choice, Johnny backed the pig, or was it the other way around? Not so fast, camel breath. We need Carnac the magnificent, who divined answers to questions in an envelope that had been sealed “in a mayonnaise jar left on the porch of Funk and Wagnalls since noon today” to tell us what lies ahead.

I make fun, and I apologize. It’s a defense mechanism. Here's hoping you and yours remain safe, but this is certain: Young and old folks in the United States will probably perish from a virus that has been ascribed to a protein source that generations of Americans have relied on in smokehouses and frying pans since Dixie came to be.

But, of course, it will pass, prayerfully with few of our sweet babies and grandmas claimed. That’s what Carnac and the financial markets are telling us now. We the people die all the time, but the traffic outside my open window this summer-like morning keeps up its incessant hum of hope.

The big hope now for those depending on escaping pig viruses and paying the rent is continued greed that shoots stock prices and the prices of what we consume higher.

If inflation does not revive then we are all in the soup. Surely, it will. A tenet of the monetarist religion is that, in the long run, though we may be dead, MV=PQ, with V, velocity, being stable. Deflation Cassandras believe that V will wilt forever.

Policy makers obviously feel otherwise. Bernanke, Geithner, Summers, et al., are intent that V will do what it's supposed to do. They’ll crack open the champagne when inflation begins galloping. And most of America will welcome a dose of it before debts overtake them. Equities look good for the rest of the year. Bonds will suffer. Refinance the home now if you can find someone to give you a loan. Interest rates are going up.