Fed Pledges to Keep Rates Low for ‘Extended Period’ Update5 – Bloomberg.com.
Thus, we can expect relatively low interest rates, until the rest of the world causes inflation in the US. The most likely scenario to cause inflation for the US—growth in the rest of the world out pacing the United States. There are two conditions that would cause the rest of the world to grow faster than the US 1) US domestic energy supplies not developed, or 2) job creation in the US does not support export industries.
Low interest rates should help the second but maybe not, see Japan. The problem in the US seems to be an appeal to create jobs by extending credit and consumer purchase growth, which is silly because overextended credit got the country in to the problems. If low rates do prevail, I expect the value of the dollar to continue its drop relative to other currencies, which should lead to greater importation of jobs. But let’s see if the economy is ready for middle class living from low skilled jobs produced in the US.
As for the domestic energy supplies solution, while much needed, it is unfortunately combined with the global warming debate. Its unfortunate because both issues need serious thought, but advocates for both sides refuse to separate the questions. Thus, I have low prospects for growing domestic energy sources, which means my prediction for the American economy is relatively low investment returns, except for those entities with large bases of foreign based profits.
