Quote:
Originally posted by roly
it's not quite as simple as that, what about the foreign investment that sustains your budget defecit? if they're not getting a decent return on their investment, then what happens?
what about the potential for significant rises in US inflation
and don't forget that trade is a two way street, if a weak dollar affects exports from the rest of the world to the US (and hence affects their ecconomies), that has a relative impact on imports to other countries from the US.
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Notice that I said temporary. 3 or 4 years at a low value is not a long time, in terms of debt repayment, but it IS long enough to get the US out of a recession.
As for the rise in US inflation, that has been uttery insignificant in the last 6 years or so, and at this point is not a factor, in fact, the treasury has had concerns regarding the possiblities of DEflation.
As I said above, it is temporarily a good thing. The lower comparative prices of imported goods from the US helps US goods remain more competive offshore, and boosts sales.