Personally, I don't think we'll be going hyperinflation way.
There is little to support such completely reckless Fed
behavior at this time, and I have not given up on Ben,
even though I don't like what AG did to our country.
He is NOT dumb, he is fighting this, he is aware of imbalances,
but all options really suck, so he is trying to go the
middle less sucky way. He has some models to do that. There
is little to support hyperinflationary printing at this
time.
While the current account deficit did not decline
significantly so far, there is some positive change in
its structure. The imports of manufactured goods from Asia did
drop a lot, and exports did rise. Now the main component
of the deficit is oil and energy. That too is set to decline
as the global economy weakens.
No, we are not out of the woods yet. However, as I noted
earlier, the trends in manufacturing employment are somewhat
misleading, they are definitely global. Manufacturing output
stayed the same, which means productivity rose. While Chinese
labor is quite a bit cheaper, no doubt, their productivity
really sucks. China is also a communist country (A forgotten
truth?) Thus, it is a huge political risk for those who
try to move manufacturing facilities there. Can these
facilities be taken over by the communist government? You bet!
No doubt, we are in for some mess, but this too shall pass.
No Zimbabwe, hopefully. 70-s, but worse. The term
is "stagflation" - restructuring of the economy, and a move
from Ponzi finance to manufacturing as the dollar declines.
The process is positive, but painful. |
