Friday, May 18, 2018

Now that we have broached the subject

China has offered a $200 billion reduction in its annual trade surplus with the U.S., said a Trump administration official.
China is not going to eat that much of the imbalance, let us not fake it.  But the number sounds about right, a  200 billion devaluation per year over five years. Let everyone pay their share to the extent they hold dollars.  This is about 1% of NGDP increase, the real thing, actuarial losses by the Fed.   I see enough real inflation here that Congress be frightened away from automatic inflation adjustments. And I see a continual pressure here to force mark to market on government programs.

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