Quote:
Originally posted by bilmore
You can obviate a deficit in a second by popping inflation, or devaluing. Why not do those things? Make it more expensive to buy Jap and Kraut cars - make it less advantageous to hire Indian labor - make it less fun to make Nikes in the Phillipines - what's our downside there? Look at how fast we can kill a deficit, and, at the same time, reduce the rest of the world to dependance on our largesse. I don't think the rest of the world, or AG and Ty, realize how dependant they are on our nicety, and how fast we could fix our own problems by fucking them. I consider it a sign of weakness in Bush that he hasn't done this yet. I'm sure Cheney has suggested it.
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And I don't think we recognize how dependent we are on the rest of the world being courteous enough to finance our massive current account deficit.
It works both ways. We kick the legs out from under China et al by devaluing, they retaliate by yanking all their money out of Treasuries and putting it into whatever the new safe investment is. Everybody's economy goes directly into the crapper.
This is of course a simplistic analysis, but there are downsides to devaluing that ought to be taken into consideration, and I don't just mean that your next trip to Lichtenstein would cost more.
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