Old inflation never dies; it only fades away

The complex of effects is quite simply too difficult for me - and I suppose for most of us - to define with any accuracy or in any detail.

The value of the US dollar would seem likely to fall, perhaps to something like the present level of the Australian dollar. However, anything that happens to or in or with the largest economy in the world has impacts elsewhere. So the Euro, for example, might not stand tall and strong when the US economy collapses. Similarly, while the Australian dollar has already fallen so far, it might still collapse further with the fall in the value of the US dollar, the reduction of US imports and the impact of those changes on Australia's major markets in Asia.

We cannot, in this account, go through all aspects of the situation which is with us now or which will confront us soon.

The first step to understanding the present situation - and in formulating "remedies," however belated and inadequate - is to acknowledge how the US deficits came about and the broad nature of their transition quality. In other words, we need to acknowledge that, with present policies, they cannot last and that the end of another glorious "bubble" may now be just about in sight.

If I have succeeded in advancing that understanding, that will be a giant leap forward. On the other hand, you might think that I am the only one who is crazy!!