Adam Katz

The Upcoming G-20 Meeting (Bretton Woods II)

Kunst,

Although I don't disagree entirely, I think that trade is somewhat premature unless something drastic happens November 15th.

Firstly, Nouriel Roubini addresses this issue and makes a good argument that the printing presses won't be turned on right now:
www.plusev.ca/nouriel-.../

Secondly, if you look at debt as a percentage of GDP, the U.S is, by leaps and bounds, not the worst balance sheet out there. Now that may change if GDP decreases dramatically (obviously debt has already increased). So yes, a depression type environment of a contraction in GDP in excess of 10% may cause a bad stagflation situation. That's why they're attacking the growth problem now and that will probably be the focus for the foreseeable future. That is inflationary but not imminently. First you fix the problem of falling prices, then in doing so, inflation is expected. But as Roubini says unexpected inflation is the real concern and right now everyone expects inflation in the medium to longer term so it may in fact be smoothed in (priced in) through this deflationary period.

en.wikipedia.org/wiki/...