DD,
Come one now.... The biggest problem with the trade deficit depends on the big ticket items like commercial aircraft. We have 'em, the Asian's need 'em, but can't afford 'em because of the high dollar.
Many Asian airlines have been holding off on purchasing aircraft for just that reason, and losing or gaining a couple of those multi-billion contracts can make a big dent in the deficit.
But most of all, US manufacturers of goods that are facing competition from cheap imports will prosper, thus making our economy stronger and lessening our dependence on foreign sources.
But inflationary, deflationary, who cares? It's the give and take of the floating currency exchange. It's economic health we're talking about here. We have it and other countries don't.
They need our strength in order for them to prosper. The US, on the other hand, has a very strong domestic economy, not entirely dependent on exporting to one particular major market.
That's the big difference that everyone here seems to ignore. But believe me, foreign investors don't ignore it. So forget about your flight of capital until Asian nations decide to actually devalue their currencies and re-inflate their economies. When that happens, then we'll see another readjustment that may see assets going back overseas.
It will be interesting to see what actually shakes out. However, either way, it will prove to be volatile.
Regards,
Ron |
