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Strategies & Market Trends : The coming US dollar crisis -- Ignore unavailable to you. Want to Upgrade?

To: axial who wrote (20030)	4/27/2009 3:12:58 PM
From: GST	1 Recommendation Respond to of 71455

<US deflation = a more competitive US economy> Durable, lasting deflation in the US is almost impossible. We would have to have a very large current account surplus and a high savings rate. We obviously are about as far from that as a nation can be. In a global economy deflation means a very strong and continuously strengthening currency. I see no reason to believe that the US dollar is in any position to strengthen substantially and to continue to strengthen over the long haul -- on the contrary, I have every reason to believe that the US dollar is in the midst of a long-term irreversible decline. That is the durable source of our inflationary prospects. On the other hand, I see very dim prospects for a strong US economy -- although it could well range from weak to pathetic. I do not see any reason to expect it to be robust and healthy. That is my reason to expect stagnation. Inflation plus stagnation = stagflation. If you can find any plausible explanation which would lead me to believe that we are going to swing from a current account deficit of galactic proportions to a gigantic current account surplus, then I would consider deflation possible. That would have to be accompanied by a savings rate north of 20%, when our savings rate now hovers closer to zero. The case for deflation as a lasting trend just does not exist as far as I can see.