“But suppose savings rates go up in America – to, say, 10% of GDP, like they were before the bubble years. That would make $1.4 trillion of savings available to finance the feds’ deficits. And suppose the slump continues…as we think it will, with another big scare in the investment markets. People will seek safety in…yes, you guessed it…US bonds. This will take the pressure off the dollar and permit the US to finance its countercyclical spending without depending heavily on foreigners. The recession/depression will be annoying…but not insufferable. And Bernanke will figure het has more to lose by undermining the dollar than to gain from it. In that case, the Japan-like slump could go on for many years – just as it has in Japan!”

Last March what I said can be found here:

http://dailyreckoning.com/the-great-red-hope/

Glad to see he’s reading our posts…