Fed Minutes
Jude Wanniski
January 5, 2005


From: Jude Wanniski  <jwanniski@polyconomics.com        
To:      Ben.S.Bernanke@ * * * * *.GOV                                               
Subject: fed minutes

6:41 pm, 1/5/2005

I didn't really expect anymore in the minutes than appeared. I'd hoped the word "gold" would appear, even in an innocuous corner of the report, but otherwise I'm delighted that the market has identified the big selloff in equities yesterday and today as a response to the minutes. The market does not like what you folks are doing, but don't know how to tell you about it in any other way. The market wouldn't mind gold's decline if it knew it would be halted at some point, with a fix, but all it has now is confusion. But note my word "froth" as it applies to the equity markets. The froth is coming out of the markets, which is why the broad-based retreat in equities. As the demand for dollars increases because of domestic considerations, i.e., repatriation of profits, progress on tax reform, gold will fall further, but inflation signals will show up before that retreat and you folks will be tempted to jump the ff rate by 50bps.


PS   Did you get the book yet?  Also, I have not heard back at all from Eichengreen. He must be nervous communicating with me. He should not be.