Yes, because the US doesn't produce enough (TV's, DVD players, semiconductors, etc that can be sold in world markets) to generate income- we borrow from the world and spend. This is unsustainable. We are the world's largest debtor. The only reason the world still accepts our currency (the dollar) is because they can buy a very important commodity with those dollars- oil (which is transacted internationally in dollars).
Bernanke stopped raising rates because they now believe a recessionary or depressionary economy will mean they don't need to fight inflation with higher interest rates.
The cost of doing business in the US from our inflated currency is keeping us uncompetitive in world markets. That's why most of what you buy is made in China or elsewhere. The only way for the US to become more competitive and attract investment back to the US from China is for the rest of the world to inflate to our level (which will take a long time) or for us to deflate.
Our soaring debts make deflation more likely because the world will not suffer inflation to help us out of a jam we created ourselves.
Of course, "helicopter Ben" is the fed chairman. He will fight deflation (by dropping dollars from helicopters if he has to) probably as much or more than inflation.
2006-08-10 09:07:10
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answer #1
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answered by ideogenetic 7
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No, I do not believe so.
The Fed chief, Ben Bernanke, finally paused Tuesday on the rate hikes after 17 continuous raises. Alot of people I have talked to and alot of articles I have read now believe this will cause what is called a "soft landing" sernario. If he had raised again, it probably would have sent us into a recession quickly and stocks would have dived seriously. I'm guessing below 10,500. This soft landing will not kill us, but send us gently down the recession ramp into an economic slowdown the public will not over react to. Expect the stocks to dip from time to time and make thier way down before we go back up. Get yourself into P&G, Pepsico, JNJ, Coke, and the like for at least another 12-14 weeks.
Expect the fed to raise again though before they pause for good. We'll probably see rates go close to or at 6.0%. We'll then see a pause for a time and then the eventual loosening of rates.
2006-08-10 07:41:38
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answer #2
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answered by Ron B. 7
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Why would you make that doomed prediction. I dont think we are heading toward another great depresion at all. Yes the possibility is there but no way. We have a huge knowledge of money management and monetary policy that we did not have during the great depresion. Our Economy will go into reccession and expansion back and forth like all Economies do but to make such prediction I highly doubt it is going to happen.
2006-08-10 19:43:30
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answer #3
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answered by Best_Answer 2
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2016-10-01 21:57:27
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answer #4
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answered by ammon 4
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Not to my knowledge.
2006-08-10 06:45:22
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answer #5
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answered by Anonymous
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WE ALWAY HAVE THE THREAT
2006-08-10 06:46:53
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answer #6
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answered by oswtygrl 4
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