Jim Jubak has a Don’t-You-Worry-Your-Pretty-Little-Head piece on MSN today, about what happens when the Fed (presumably) stops printing free money this summer. Here’s his weakest argument:
The world’s bondholders recognize that the United States will have to let the dollar depreciate in order to reduce the U.S. balance-of-payments deficit with the rest of the world. An orderly reduction of that deficit because of a slipping dollar would, in fact, be a good thing in a world that can’t keep running huge surpluses in some economies and a huge deficit in the United States.
Why so weak? Well, read the very next line:
Whether the world can engineer that kind of orderly rebalancing is an open question. Right now the odds aren’t good. [Emphasis added]
Jubak just demolished his own theory. Comforting stuff.