Please, do not stimulate until you USA drop.

The US consumers shopped until they dropped and now it seems that their government is taking over with “we will stimulate until we drop”. We understand the reasoning but we can’t help feeling nervous about it.

There are seminars on “How to restore Global Financial Stability” but, in the name of the do-no-harm principle, let us not forget that the most important role for the US is to preserve the global financial stability we still have, namely the current role of their dollar in the international financial system.

Many American economists egged on by some foreign economists indicate, even in the face of the many surplus countries wanting to reactivate their own domestic demand, which leaves less resources to buy US debt, that there is absolutely no problem in sight…Let us pray they are right!

But, just in case, and especially after the unsettling recent experience with the adjustable mortgages, could we not ask the US to build up its debt with long term paper at fixed rates? I mean allowing so many to anchor their boats so close to the exit of that safe-haven the dollar currently represents seems not the wisest thing to do.

PS. Do all those who propose stimulation know for sure the whereabouts of the economy’s Gräfenberg spot or are they just boasting?