Chris Beggy wrote:
> Henry C.K. Liu wrote:
> >
> >
> > Stiglitz and Krugman are both selling snake oil (quoting the Japanese) and are
> > merely doing the "if A does not work, how about B or C or A+C?" They haven't a
> > clue on how to make Asia recover. The fact is Asia will not begin to recover
> > before the US economy stops exporting deflation to feed its own bubble. The
> ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
> > beginning of global recovery will come after the US economy crashes. The longer
> > the US bubble hold, the more severe the global pain when it comes. And if the
> > pain is severe enough, neoliberalism may well be the casualty.
> >
>
> I haven't heard this before, and it sounds interesting. In the 1980's a
> criticism of Japan was that it was exporting unemployment to its trading
> partners. How does the US export deflation?
>
> Chris
The net result of the Asian financial crises was devaluation of Asian local currencies which reduced the price of US imports. That keeps US inflation low in an expanding economy that otherwise would overheat. In that sense it exports deflation through the manipulation of international currency markets that results in deflation in other economies caused by currency devaluation and high interest rates.
Henry C.K. Liu