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Reply #6: I think the whole thing involves fighting deflation. [View All]

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seasat Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Mar-10-04 12:19 PM
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6. I think the whole thing involves fighting deflation.
We're doing our best to go down the deflationary spiral like Japan did and is coming out of. Our deficits are out of control. Greenspin has lowered interest rates as low as possible. Letting the dollar devalue is the only thing left to keep deflation in check. The Shrubbite spin that the devaluing dollar is to increase exports. The problem with that is that we've lost too much manufacturing to increase export or meet domestic production. The only group that benefits from this arrangement are the extremely wealthy in the US.

The only reason that the US economy hasn't completely collapsed is foriegn investment is still coming in. When foriegn investors realize that markets like Japan or Germany which both increased exports, are better deals then we are really screwed. The big question is whether the result will be runaway inflation or deflation? There are possibilities for both and triggers for both that seem to be close to being coming about. The only thing that I know for sure is that the current policy is not sustainable. Something is going to give soon and it won't be pretty.

We need big changes in tax policy to lower the deficit and increase foriegn investor confidence. We need alternative energy sources and conservation to lower dependence on foriegn sources of oil. We need trade agreements that fight unfair subsidies such as lax environmental and labor standards. We need labeling that identifies countries of origin on food and products with a requirement that so much of the product has to be made in the US to be considered US. We need education and research programs to increase US worker productivity. We need protection for US intellectual property so that we benefit first from our R&D. We need rules that keep offshore companies from getting US government dollars. We need a real health care program to lower medical insurance costs lowering costs to US employers. We need a government that is not a corporate whore but will support small businesses that provide invovation and real US job growth.

Sorry for the rant but when I read the article about the trade deficit in today's business section, it all kind of bubbled up.
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