You are wrong in "C" above. You make a flawed assumption thinking that Americans have been SAVERS in the first place. In fact, the United States as a nation has one of the WORST savings rates in the industrialized world. In 2005, the savings rate for the entire year was actually NEGATIVE. People here on ET keep ranting and raving about the Fed needing to be abolished, yet that is a total fantasy given that capital formation/creation for economic investment, expansion, job growth, etc. . . . will never, ever come from American's savings rates. Without the ability to save, the United States has no other realistic way to create capital for economic investment in a $14 TRILLION DOLLAR ECONOMY besides the Fed. That's just basic Econ. 101A And it's a Fact.
America knows that the more money they print the more the world shares the burden (IMO, anyway the world morally owes this to America for having helped them in many ways, starting from WW2 & onwards.)
Another fallacy. It's not about American workers needing to get their hands "dirty" again . . . It's about an EDUCATION system that provides for skilled and talented members of the work force. Just take one look at how many engineering students are graduating from college in Japan or Korea ( as well as other countries ) vs here in the U.S. It's not even close. And it's not just at the college level where this starts . . . it starts in high school where 92% of foreign students who received engineering degrees indicated that BOTH physics and chemistry were required back in HIGH SCHOOL, not to mention 83% who said that introductory calculus was required, and 67% said that linear algebra was required. Again, this has NOTHING to do with American workers having to get their hands "dirty" again. It's about the quality of the EDUCATION system here in the United States. Duh.
real variables vs. policy variables. In the very long run, the U.S. will only continue it's dominance through the three real sources of growth-labor, capital stock and technology. We got immigrants. We have plenty of capital stock (we're kinda past that point...)....so it comes down to technology. That's how we will grow. We need to provide as much incentive as possible to invest in research. Money is NOT a real variable-it's just a medium of exchange. An activist central bank is not a help. Structural change in the financial industry is helpful. I'd include that as technological progress. Simply screwing with policy variables doesn't really change anything in the long term....the problem is deeper than that.
We have a "free market" education system.....focus should be on producing more lawyers for litigation cases, more accountants for cooking the books and more business/finance grads (MBAs) for designing the next will not fail pyramid selling scheme i.e. CDOs Who needs more engineers when the countries infrastructure is collapsing any how?
oh yeah-even if inflation leads to an expansion of p/e multiples in NOMINAL terms.... Corporate earnings are likely to revert to the mean, after a couple years of record margins. So the "E" will contract, regardless. I mean, there will still be awesome new upstarts to invest in, in the U.S. Some at bargain prices. They will have secular growth, barriers to entry, etc. and will make nice investments. But I'm underweight the S&P. I'm long the emerging market companies with growing domestic demand. I'm spending all my time looking for decoupling within the emerging markets, even if not the market as a whole.
PLEASE add these : 1/Sky is falling 2/We are done 3/Its all over now 4/We are in a recession ( even though we can't prove it) 5/The Titanic is about sink 6/ Real estate will never come back again. 7/We deserve more than what we are entitled to 8/ Pessimism is our national pastime - we love it. 9/ Doom and Gloom is our second name.
I just bought a brand new VIEWSONIC MONITOR today so I can watch the market graphics on HD quality. I have no fear to spend money, cause I can always make it..I will rush out and buy a 50 inch HD TV as soon as I get a rebate from our stimulus package and will help revive the economy.