And one more thing – there is ongoing debate just what is the real inflation level in Russia,
russian official statistics is somethat similar to CPI, but it’s even more narrow, and more targeted to “average consumer”, i’m not sure but it don’t think they even calculate home rents, which is a significant portion of expenditures for average citizen, since that market is officaly non-existant – nobody wants to pay taxes on that. BTW realiable real estate stats are also non-available, deals are often conducted several times below their true price to avoid taxation, and the only stats are just estimates and gray realtor’s records. Supposed to be CPI for middle and upper class is growing much faster, not to mention the “CPI for the rich”.

And every year there is a similar pattern of several percent inflation in January.

That’s why the M2 has been and is ballooning. The flow of money has lowered rates for corporate bonds and goverment bonds well below inflation and poped a buble in real estate. It has not created an outright buble in equities yet.

As for the inflows – there are but for the most part it’s debt – corporate for the most part, and direct investment, which has been growing significantly. In equities we are seeing ouflows actually for more than a year already due to political tentions and that other brics have became more glamorous. That’s another reason why the stock market has not poped up significantly.

As for another strategy to semi-sterilize which may come true – it looks like the goverment is on a path to make some promotion for stock market in general. I think they will continue to do IPOs of goverement related companies in large sizes, the private sector is already doing it, there is an IPO boom here. Then i think those companies will retire debt with those money and finance expantion projects.

just how long do you think it is possible to have global trade rise faster than global production ? (bout twice the rate)
Same with debt / GDP ?
same with international imbalances / GDP ?
REserves / GDP ?

THe idea that asia could be strong as the US grows weaker is a total joke. WHo are the asian lending to ? the USA ? WHo are the asians selling to ? The USA and EUrope ?

WHo is going to be hurt the most if the consumers in the USA start to save more ? THe US room or the asian radiator ?

THe same holds for the USA (their addiction to cheap financing grows and they rely more and more on foreign products with less and less to offer in exchange.

The same could have been said about nuclear weapons. Increase in the arsenal of Russia, china, NATO, reduced the chances of a war, since all have more to lose.

THe other side of the coin is of course that if a war is to happen, the damage will be higher.
THe likelyhood of a complete anhilation of the human specy through a nuclear war was nihil in 1944, it has steadily increased ever since.

Same with financial terror. Indeed noone has an interest in blowing the all thing, yet, just as the arm race could not go on forever and has dangers, the greater imbalance race has to be stopped because it has its own dangers.

most of their US dollar assets would be immediately sequestered.

The commodity boom is changing the economic landscape across the developing world. The volume of global trade rose 9.2% year on year in 2006, and emerging-market countries increased their international reserves by $738 billion. This explains the emerging-market boom. This is not a fad or a reflection of global liquidity. The $256 billion of net private inflows into the emerging markets reflect the credit strength of these economies and their ability to grow.

At the same time, the United States is withering away under the weight of its enormous debt load and various asset bubbles. The US economy grew an anemic 1.3% year on year during the first quarter of 2007. Unemployment is picking up and the dollar is collapsing. The unemployment rate in the US increased to 4.5% in April. Indeed, April saw the weakest pace of job creation in two years. The impact of the housing slowdown is starting to appear in the employment data. The tightening of lending standards is reducing the availability of mortgages, forcing further slowdowns in the construction sector.

The economic slowdown in the US is accompanied by serious concerns about the health of the financial sector. With more than $700 trillion in derivative contracts floating in the marketplace, and much of it tied to the mortgage market, an accident is definitely on the way. Some analysts attribute the steady rise in gold prices to concerns about a looming crisis in the US financial sector.

“… Government agencies measuring price changes in consumer goods report an extended period of benign consumer inflation… What’s missing is an equivalent calculation of asset inflation…” http://www.globeinvestor.com/servlet/story/RTGAM.20070528.wrmorgan28/GIStory/

the government can also withdraw local currency from circulation by running a fiscal surplus out of its local currency revenues and holding the surplus on deposit at the central bank — rather than say holding those deposits in the banking system.

Monetary sterilization — $ comes into the economy, and is traded for rubles, increasing base money. the government may want to take some of its export tax revenue and spend it locally, so it goes to the central bank. or a private investor may want to buy a ruble denominated asset, and thus changes $ for rubles. To sterilize the initial increase in the money supply, the central bank has to run down its domestic assets/ sell sterilization bills. absent such action, the money supply increases.

at least that is how I understand it.