dow has crashed, page-17

Club,

"" If the US inflates itself out of debt, which so far appears to make sense, then how do you propose it will effect us? ""

If we lend the USA say $1 billion when our exchange rate is $0.65c (AUD$1.5 bil), and the USA inflates itself out of its debt, we lose because with a decreasing USD Exch rate to say $1 USD= $3 AUD we only receive $333 mil back. It happened in the Weimar republic after the war, in Argentina during their financial crisis, and to take it to the extreme, in Zimbabwe, where inflation is now estimated to be in the biliions of percentile. I don't think it's a co-incidence that just when the US is borrowing trillions from the rest of the world to pay for their stimulus packages the USD index has actually increased relative to the rest of the worlds currencies. Their economists have been taking advantage of this effect for decades.

The inflation and resultant devaluation of the USD is almost inevitable as it's the only thing that will make the US more competitive in the long run. The alternative is a Japan like stagnancy for the better part of two decades. Where Japan differed is that it actually had trade surpluses to assist them, the US doesn't. The USD Debt appears to be headed swiftly to 100% of their (rapidly shrinking) GDP of $15.5 tril odd.

You are also correct, in my opinion, in saying that other countries also face these adjustments. When you compare the level of debt per person, the USA is topped by the UK AND Australia. Makes you think, doesn't it lol

And I am not as confident as you that we learn from our mistakes, if we did, the GFC would not have happened in the first place.