Zeev,
<<Take into account that our monthly trade deficit is now approaching $40 B/month and is still growing. Also take into account that some Asian economies are once more on the brink of destabilization. >>
That Asian economies are tottering, that Europe is weak and divided with the Euro a disaster--these things are why AG has to be extra careful here. He could put the world into a really destabilizing spiral. Our trade deficit is the price we have to pay for being the most dynamic economy (and biggest spenders!) out around right now, with still the largest, wealthiest middle class. AG can't pretend he is in a vacuum; if the US goes into a recession, the world won't just get a cold, it may get pneumonia. This might have really serious repercussions, including but not limited to impairing free trade, which I would guess both of us, at least, think should continue.
Personally, I think he should ease, and soon. Inflation numbers have been pretty tame, tight labor markets notwithstanding. There are still a few high priced stocks, most of them have been decimated.
Of course, if Mr. Bush gets his way with estate taxes and general income tax cuts, the middle class will shrink badly over the next 10 or 15 years, IMO. The upper and lower classes will get larger, with bad consequences for both this country and the world. I doubt this Congress will give him what he wants, but who knows. After this election, I wouldn't bet on anything.
Sam |
