Gradually improving U.S. economic data and a Greek deal of some sort have relieved immediate financial fears, and so bond and mortgage rates have risen.

The rate increase is proportional to the relief. Ten-year Treasury notes have moved from 1.92 percent to 2.02 percent, and mortgages from just under 4 percent to just under 4.125 percent, roughly like your kid’s fever dropping from 105 to 104.5.

However, the "kid" here (the U.S.) is in a lot better shape than the kid in Europe. The most reassuring news here is the uptrend in the small-business survey by the National Federation of Independent Business (NFIB).

Although its overall optimism is little better than the bottom of recessions going back 25 years, it has been improving each month since August, and only two months since 2007 have had better readings. The weakest internal component has been sales, but the worry about sales weakness is now fading fast.

Another legitimate breakthrough: Weekly claims for unemployment insurance have dropped again, to 348,000 last week. Wobbling near 350,000 in the last couple of months has been a straight-line decline from the 400,000-plus range of the last two years, and is only about 25,000 weekly above what anyone would consider normal.

However, everything about this cycle is so abnormal that nobody knows if normalized layoffs will translate into normal hiring.

More good news: Inflation is not a problem. The consumer price index arrived for January up 0.2 percent both overall and core, and in the last year overall up 2.3 percent core and 2.9 percent overall. The numbers don’t seem to do much for inflation anxiety, most of which is based on conspiracy theories of one kind or another.

With us always is the "cooked-books" crowd. Never mind the impossible complexity of getting the dozens of inflation reports from the Bureau of Labor Statistics, Commerce Department and Federal Reserve all to tell the same false story.

People who believe in rigged reports also invariably believe that government is incompetent; if so, how is a pack of fools to run such an elegant conspiracy?

A branch of this bunch objects to updating the "market basket" of goods and services to reflect current consumption. This subset also loves the horror stories of atypical consumers: A family putting a kid through college feels price pressure that a retired couple does not.

There is no arguing with those who want the world never to change. Today, keeping a horse in New York City is unimaginably expensive; 100 years ago in that city a horse was the common possession of a lower-class merchant.

A serious concern, historically, is the tendency of government to print its way out of debt trouble — especially when so many authoritative voices (responsible and not) say that the Fed is "printing money" right now.

Of all the things that I discuss with my ceiling at 3 a.m., U.S. money-printing is the least. For three reasons. The Fed is printing money to replace money that frightened banks and investors are withdrawing and burying in their backyards. If new money is in balance with money withdrawn … no inflation; the new money prevents deflation.

Second, take on faith that the Fed is deadly serious about a 2 percent target for core inflation. As an institution, it saw the 1960s-1980s consequences of "a little inflation," and it will not repeat — no matter what "left-side" economists propose today.

Third … the third reason is so powerful that we will wish it were not there. When the Fed tolerated a little inflation, and it went from 2 percent to 12 percent, there was so little debt in the world that its owners could not protect themselves.

There are too few "bond vigilantes" to form a posse. Today there are mountains of IOUs all over the world. Any effort by any government to inflate its way out of debt will be met by massive selling, and the instantaneous and pre-emptive rocket in rates will demolish the offending economy.

Vigilantes grown to army-size now cause the austerity predicament. Only Greece, Ireland, Portugal and the United Kingdom are in its grip. Italy, Spain and France have promised austerity but not begun. In the U.S. we have not even promised.

Improving trend in retail sales is now sliding … or just choppy?

If the small-business trend is real, and not just getting used to a new and thin normal, the next step will be hiring. I hope, I hope.

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