Unfortunately, the charts won't copy -- so they're missing in this article. Russell is not a WN, but he's very knowledgeable about the world of investing.

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March 17, 2006 -- News, Bloomberg: "Senate Budget Plan Omits Bush Medicare Cuts, Adds $11 Billion in Spending.The U.S. Senate approved a 2007 budget plan that rejects President George W. Bush's calls to trim Medicare spending, while it boosts federal spending by at least $11 billion more than the administration's request."

"U.S. Military Spending in Iraq, Afghanistan to Reach $9.8 Billion a Month U.S. military spending in Iraq and Afghanistan will average 44 percent more in the current fiscal year than in fiscal 2005, the nonpartisan Congressional Research."

In the meantime, Congress faces the need to raise the national debt to almost $9 trillion. Over the past 12 weeks M-3 was up $247 billion or at a 10.5 percent annualized rate of growth -- a $1 trillion annual expansion of the broad money supply.

Russell Comment -- Where's the money coming from? No problem, we'll just "create it."

I sincerely hope you read the great article by James Turk on yesterday's site. If you read that article, you have to wonder what's holding the dollar up. Of course, with the world loaded with dollars, nobody wants to see a dollar collapse -- except possibly the Bin Laden-ites. And maybe some "I told you so" gold-bugs. Yeah, even the Chinese want the dollar to hold together -- after all, they're sitting with $800 billion worth of assorted US Treasuries.

This international explosion in fiat currency is incredible -- the world has never seen anything like it

Yesterday, the US Dollar Index plunged below both its 50-day and 200-day moving averages, a move that gave me pause. And now I'm wondering whether the Dollar Index is going to test its last decline low at 88.

There's nothing like long-term perspective, and here we see the monthlies for the Dollar Index going back to the mid-1980s, courtesy of my friends at DecisonPoint. What we note here is the importance of the major Dollar Index support at 80. After the collapse off the 1985 high the Dollar Index tested support at the 80 level, tested it on four separate occasions -- the last being in December 2004.

So what do we know? We know that on any decline, if the Dollar Index breaks below 80 that would be historic and a technical and maybe an economic disaster. But why worry, the Dollar Index stands at over 88 today.

Question -- Russell, you say that the Fed is locked into a situation in which they must continue to inflate. If that's the case, isn't the dollar doomed? And if so, how will the Fed handle that?

Answer -- Look, the Fed crowd isn't stupid. Greenspan isn't stupid. Bernanke isn't stupid. They all see the big picture. Ultimately the dollar must collapse. So how is the Fed addressing this situation? The key word is -- slowly. The Fed is going to keep the dollar alive going as long as it can, and it's going to die slowly.

The Fed technique is a balance between raising rates to slow inflation (or at least to give the appearance of slowing inflation) and creating more liquidity, which the Fed hopes will keep the economy from collapsing. But remember, the operative word is "SLOW." The Fed hopes to keep the process of dollar deterioration going slowly, making the dollar acceptability last as long as possible.

After all, Greenspan kept the dollar alive for 18 years, but during most of his reign debt was kept under some kind of control. But Bernanke has a problem -- the US is up to its eyeballs in debt, and the US can't take too much in the way of rising interest rates. Thus, the dollar is closer to major trouble now than it ever was under Greenspan's reign.

We're drawing ever-closer to the time where the Fed will have to create galloping liquidity in order to keep the US economy above water. What would be the tell-tale signs of galloping liquidity (monetary inflation) be? A falling dollar, rising interest rates, sinking bonds and rising gold. At this time, the only hint of trouble is the rise in gold that we've seen over the last four years. But I believe it's very early in the gold bull market. In other words, the Fed still has control of the monetary picture. Nevertheless, the Fed's control is now more tenuous than ever. That's because the debt-logged US economy is now more sensitive than ever to increases in interest rates.

To my mind, the whole situation requires some deep thinking and deciding on the part of you and me. How do we position ourselves in view of the current situation? Yes, everything feels fine and comfortable as I write. But underneath we can sense deterioration. Here's the way I see it -- first, I have to resign myself to the thesis that the government is going its own way, and there's nothing I can do about it. The spending seems to have taken on a life of its own -- it's out of control. And nobody wants to stop it.

I've got enough gold so that if there's a run on the dollar, if there's a dollar collapse, I think I'll be all right. Everything else is secondary. My house is "mine," because I own it free and clear. What securities I own are not on margin. I honestly don't know what will happen to US stocks and bonds if the dollar goes into a tailspin. The various dollar denominated securities may go down in value, they may even crash, but let it happen, there's not much I can do about it if the dollar starts falling apart..

What about holding euros instead of dollars? My own guess is that if there's a dollar crisis, it will also be a world fiat money crisis. In other words, I don't know if I'd be any better off in euros than dollars.

So aside from holding gold, I believe I'll just keep playing the game. Hold some bonds, hold T-bills, a few utilities, a few oils and raw material ETFs, it doesn't matter. I'll just act as if everything is all right. After all, isn't that what the Congress and the Senate are doing? They keep spending, the national debt (the ceiling has been raised four times under Bush), total is now $9 trillion, and hey, aren't we still "the greatest country in the world"!

So you know what? I'm going to enjoy the weekend. Of course, I'd rather be 21 than 81, but what the hell, I still feel pretty good (kinda stiff in the morning), and I'm still a news nut -- I love reading about what's going on, and I love trying to figure out where it's all going.

Are we going to attack Iran? Will housing continue to hold up? Will the stock market hold up? How long can US good times last. Where will gold go? What's happening in China and India? Will the Bush administration implode? Will the Dems really run Hillary? Who will the Republican pick? How strong or weak is the stock market, actually?

I've lived through a lot of wild and crazy times -- the Great Depression, World War II, jazz, antibiotics, statin drugs, rock-and-roll, bypass surgery, bull markets, bear markets, hip-hop, black equality (sort of), TV, the Internet, the list goes on and on. And the list is still going.

What, me worry? Nah, I'm too old to worry. Listen, I've counted eight times when I could have died or been killed. They say what ever doesn't kill you makes you stronger. Which is probably why I'm still here and feeling, well, pretty strong.

I've always been a worrier. Wife, Faye, will attest to that. But I'm also an optimist -- Faye will tell you that too. How can a worrier be an optimist? I'm not sure that I know, but somehow I've always solved or gotten over my worries, and then I feel optimistic again. The secret of life is to sense the problems or the potential dangers ahead -- and feel confident that somehow you'll solve them or overcome them -- and then to survive.

At present, I don't see any clear trend in anything. Well, maybe with my PTI now going higher the trend of the stock market is bullish. Yet, I have a hard time getting bullish about the market when Lowry's Buying Power Index is trailing the Dow.

A while back I thought Google was the answer to the speculator's prayer. Everybody and every fund had bought or were buying GOOG. Alas, probably more money has been lost in Google than has been made.

The chart shows GOOG down 26% from its high and now below both its 200-day and its 50-day moving average. So it's white-knuckle time for Google fans. Back in December, who would have believed it? Actually, all the internet growth stocks appear to be dying -- Yahoo, EBAY, Amazon, Google. See charts below.

What's wrong with these stocks? Basically, they were selling at ridiculous price/earnings and price-to-sales ratios. Once the market got over its "Gee whiz," the stocks began to reflect reality.

TODAY'S MARKET ACTION -- PTI was up 2 to 5705. Moving average was 5688, to my PTI remains bullish.

The Dow was up 28.41 to 11279.65. No movers in the Dow today.

April crude was down .81 to 62.77.

Transports were up 10.23 to 4563.33.

Utilities were down 1.96 to 408.11.

There were 1777 advances and 1458 on the NYSE. Up volume was a weak 54.3% of up plus down volume

There were 267 new highs and only 27 new lows. My 5-day high-low differentials improved from Thursday's plus 826 to today's plus 988.

Total NYSE volume was 2.53 billion shares.

S&P was up 1.92 to 1307.25.

Nasdaq was up 6.92 to 2306.48 on a big 2.54 billion shares.

My Big Money Breadth Index was up 4 to 691.

Mar. Dollar Index was down .13 to 88.53. Mar. euro was up .16 to 122.63. Mar. yen was up .73 to 87.39.

Bonds were lower. Yield on the 10 year T-note was 4.67%. Yield on the 30 year T-bond was 4.71%. Inversion has disappeared.

April gold was down .30 to 555.10. May silver was up 2 to 10.36. April platinum was up 3.40 to 1034.00.

HUI was up 1.43 to 302.43.

One share of the Dow buys 20.32 ounces of gold.

One ounce of gold buys 53.55 ounces of silver, and this ratio continues to decline in favor or silver.

ABX up .03, AEM up 1.24, AU down.14, NEM down .14, SSRI down .05.

The precious metals continue to consolidate but are holding very well -- very little give so far.

STOCKS -- My Most Active Stocks Index was down 3 to 428.

The five most active stocks on the NYSE today were -- GE up .13, LU down .01, PFE up .34, TWX down .04, XOM down .59.

The VIX was up .14 to 12.12.

McClellan Oscillator to be posted shortly.

CONCLUSION -- Stock market looks like it could be running out of gas. A lot of churning today, and up volume was unimpressive as was breadth. Nevertheless, my PTI remains bullish by 17 points so we'll retain a bullish bias. But all in all, there wasn't much movement today.

No site this weekend -- I've got to rest my eyes as much as I can.

Have a fab weekend --

Russell