> But I agree with Patrick that reflation - if that is a fair account of Doug's position - is obviously a bollocks of an answer. At best it is a stop-gap, that might buy one some time. But it can only perpetuate the problems that preceded, which is to say that, like my country, the US is consuming more than it produces, and needs to produce more (or consume less), and it has allowed services to displace manufacturing, putting it at a disadvantage. More of the same easy money is not really the answer, any more than a junkie needs more heroin.
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But I don't think that's Patrick's position. The only sure way to get the economy to produce more/consume less and replace services with mfg is to bring about a depreciation of the currency. But I think Patrick would say that's just more crisis displacement - i.e., it just shifts some of the overcapacity he thinks is at the root of the crisis from China to the US.
In fact, devaluation *is* a type of reflation, for the home country.
SA