With the Fed decreasing the discount rate to avoid a recession and continued inflation, is the US economy going to grind to a halt like Japan? Paul Krugman wrote an article a couple years ago that warned of parallels.
Here is a link that explains Japan’s economic woes. With the housing bubble bursting here in the US, banks will be burdened with bad debts. We have had our manufacturing shifted abroad which so far has sent unemployment to 4.6% in Jul 2007 (cite). Which isn’t bad. So that hasn’t been paralleled yet.
Granted, inflation isn’t soaring but core inflation is still worrisome (article). Add to all this pressure, the US trade debt. Something’s gotta give, right?
It doesn’t look like money supply is the issue, it looks like money management and improper allocation of assets are the problem. Thought?