There are many possible responses to the dollar's decline. One is from renowned commentator Ian Reid. Reid's argument is as follows:
I say stop the printing presses, raise some rates and let those with money spend it and save the dollar. I don't want to be a 21st century Zaire...This could certainly defend the dollar, largely by giving developing countries (read: China) more incentive to buy U.S. bonds. The downside is... well, someone else can make the counterargument.
One thing to be clear about is that inflation and currency depreciation should be differentiated from currency collapse and hyperinflation. It is unlikely the U.S. would suffer from the latter, even if/when it does suffer from the former.
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