A central banker's lot was never as simple nor as easy as it looked. Even so, it has gotten much harder, because the things he is trying to control now happen in other countries and other economies, not his own.

The Greenspan Fed, colluding with the federal government, brought about the biggest dose of financial stimulus the world has ever seen. Did it create a boom in America? Yes, but not the boom it wanted. What it had hoped to create was a charming old-fashioned economic upturn, in which consumers bought more, businesses hired more, and everyone ended up with more money. Instead, it created a boom in debt, and residential property. Americans were able to spend more, but they had no means of earning more. The new jobs were created in China, not in America. It was a boom, but it was an ugly, ungainly one.

Now, when Americans spend, the Chinese hire. And when Americans stop spending, the poor Chinese assembly line worker gets laid off. Financially, too, globalization has brought a strange division of labor. The Chinese (and Asia generally) export deflation. They can make "stuff" cheaper than anyone. The more they compete for market share, the more sophisticated their production facilities become, and the further prices fall. We Americans (and Europeans, too) are happy beneficiaries. Let the poor Asians bust their humps! We'll think.

But how do we think we'll pay for the things they make? Ah...that's the other side of the globalized financial market. While they export deflation, we export inflation. We export money. Our money is then recycled to central banks all over Asia, where it is bought with local currency. The central banks must create currency to buy it, which causes inflation all over the world. Since prices of manufactured goods are falling - thanks to Asian production - the inflation seeps into the prices of things Asians can't manufacture: property, oil, gold and luxury goods and services.

Asian central banks now have enough dollars to control every company on the Dow. But rather than buy equities, they've bought bonds. This, combined with a 24-year bull market in bonds, is what made Alan Greenspan a genius. As long as the Asians were buying and rates were falling, asset prices increased; the maestro looked like he knew what he was doing.

But now, Ben Bernanke faces the lopsided world that Alan Greenspan helped to build; he may not find being a central banker so agreeable. The great bull market in bonds appears to have come to an end in June of 2003. Since then, the 10-year T-note has gone down. As it falls, the cost of credit goes up, reaching 4.59% yesterday. If the trend continues, as it is likely to do, the next Fed governor may pull on levers, twist knobs and find that nothing good happens. Asset prices will decline with bonds; Americans' purchasing power will fall with their homes. Bernanke won't have to raise rates; bond investors will be raising them for him.

*** "Mass layoffs highest in 4 years," says a headline in the L.A. Times. Hmmm...we thought the Chinese were the only ones who still lay off employees. We're all thinkers now, aren't we? Thinkers don't get laid off, do they?

*** The latest news on the property front. U.S. homebuilder Lennar used to prohibit speculators from buying its new units. It wanted to be sure there was a real user, homeowner on the other side of the transaction. But Lennar's stock is down and the new house market seems to be cooling down. Lennar says it will welcome speculators. It will take anyone's money.

In Orange County, CA, sales and prices are still strong, but realtors report that houses are staying on the market longer before they are sold.

Bill Bonner is the President of Agora Publishing.  For more on Bill Bonner, visit The Daily Reckoning.