Why are currencies strengthening in weaker countries, such as the United States?
A. I think the reason the United States has become a safe haven is because we don’t have huge amounts of debt and we still have taxing capacity. We’re in a better state than many countries in Europe that way. If we go into a recession, the individual states will bear a lot of the unemployment costs, so the federal government will be affected but not as much. I think Japanese banks are still in relatively good shape. Q. But what about the bailout and the costs of the war? Haven’t those expenditures ramped up U.S. debt considerably? A. It could well become a problem. It’s a question of how everything plays out. We may well have a debt problem going forward, but the starting point is reasonable. It could be a lot worse. The other thing that is helpful is to the extent they keep interest rates low, it will not be that costly to fund, particularly at the short end. Q. Does keeping rates low risk inflation? A. It’s not a great thing to do in terms of risking inflation, but since the whole wo
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