“Yes, sir, we’ve just had our 70 fat years in America, thanks to the Greatest Generation and the bounty of freedom and prosperity they built for us,” New York Times columnist Thomas Friedman wrote last week. But it’s over. “Welcome to the lean years.”
He might be right. I don’t know. But I do know that Friedman is far from the first big-name pundit to proclaim confidently the dawning of a new, dismal era. For the better part of the last year I’ve been writing a book about expert forecasts and much of that work consisted of going through archives and digging up old predictions. Two conclusions emerged with overwhelming clarity.
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History tells us that it is the exit strategy from a crisis that paves the way to the next one. The most recent instance has been the US exit strategy from the double shock of the dot.com bubble and the Twin Towers attack.
The U.S. dollar has fallen in value vs. most other currencies for most of the last nine months and is now flirting with multi-year lows. More U.S. dollar weakness should be expected but not necessarily feared. Contrary to many proclamations from official and private sources, a “strong” dollar is not necessarily in the U.S. or collective global economic interest. Attempts to prevent a continued orderly dollar decline may further perpetuate global imbalances, slow U.S. economic recovery and prevent a stabilization in the U.S. debt dynamic that is badly needed.
President Barack Obama warned Thursday that the U.S. economy was running up to 8 million jobs short of where it should be, and that filling even part of the hole would take fresh action from his administration.