>>AC, Your scenario looks a bit like Japan in the 90's, doesn't it?<<
No, it does not look remotely like Japan in the '90s, unless one is the victim of an idée fixe, as you are.
1990s Japan had sustained weak domestic demand, a banking system hobbled by the cultural necessity to support huge amounts of non-performing debt, overpriced and declining equities prices, declining real incomes, negative real interest rates and deflation.
The USA today has strong growth in consumer demand, rising real incomes, high productivity, a banking system that is in historically excellent shape, low stock prices and low interest rates. Of course, along with this we have high absolute debt levels (but about average, when measured by debt service requirements) and rising residential real estate prices, which are a natural outcome of the unprecedented prosperity that the US is currently enjoying. |
