>In a separate letter released Thursday, Bernanke told Rep. Harold Ford, D-Tenn., a reversal of these capital flows away from the United States, were it to occur, would not necessarily harm the U.S. economy.
>"Should such a development occur, it might be associated with a decline in the value of the dollar and a narrowing of the U.S. trade deficit," Bernanke said in the March 21 letter. >But he added: "Neither of these events would be likely to threaten U.S. growth or boost inflation and interest rates to a worrisome extent."< he's right, if (and only if) the fall in the dollar's value is mild. If it's sudden, all bets are off. It should be mentioned that a small and mild fall in the dollar won't help the US trade deficit much. In fact, given the "J curve" effect, the deficit might well get worse. On 3/25/06, Sandwichman <[EMAIL PROTECTED]> wrote: > Mon dieu! A General Glut! What would Jean-Baptiste say? it's interesting: the establishment macro economists have been becoming more Keynesian during the last few decades. -- Jim Devine / "There can be no real individual freedom in the presence of economic insecurity." -- Chester Bowles
