Unless The Trade Deficit Shrinks, The Combination

The Good News Is That A Competitive Dollar In The Global Market And A Strong Dollar At Home Are Compatible In Both The Long Run And During The Transition To A More Competitive Dollar.

Even If The Dollar Does Decline During The Coming Months, The Delays In The Response Of Exports And Imports To The More Competitive Dollar Will Mean That The Increase In Aggregate Demand From This Source May Not Happen For A Year Or More.

Homeowners Who Refinanced Their Mortgages Took Out Cash And Reduced Their Monthly Payments At The Same Time. Much Of The Cash Obtained By Refinancing Was Spent On Consumer Durables, Home Improvements And The Like.

The Only Way That We Can Reduce Our Financial Dependence On The Inflow Of Funds From The Rest Of The World Is To Reduce Our Trade Deficit.

And Finally, No Matter How Good The Science Gets, There Are Problems That Inevitably Depend On Judgment, On Art, On A Feel For Financial Markets.