LK,
"Personally, (because I don't have the weight of the world on MY shoulders and don't have to deal with the consequences) I think the risks of importing worldwide deflation grows daily, and therefore, a drop is becoming more likely daily."
I agree. However even if/when the interest rate drop comes, it will help short term, but, if your diagnosis is right--that we will "import worldwide deflation"--won't that fix be temporary if the Asians keep on madly producing (remember the 5 billion suits?) but don't become consumers themselves? Aren't the consequences of this either tariffs of some sort (to stem the imports)--which would be disasters unto themselves--or continual deflation until no one can "make a buck"? Even the service sectors will be affected eventually--who exactly are they going to service? Yes, we will all need, e.g., doctors, or, heaven help us, lawyers, accountants etc., but who will pay their stiff fees? They will have to lower them to adjust to the relative poverty of everyone else.
Hope I'm making myself a little clear on the nature of the deflationary spiral that seems inevitable in this global economy of ours if the countries that make so many of our "goods" don't develop politically or economically into middle class consumers like us, or at least like the Europeans. Of course, the environmental consequences of that could be disasters in their own right, but let's not think of that for now.
Have to go home now, have a great evening. Look forward to hearing why I'm way off base in the morning.
s. |
