Also noteworthy is that an environment of increased risk aversion and flight to quality will complicate Japan's problem of generating inflation, and China's challenge of
attaining currency stability.
However, this near term calamity doesn't address the underlying fundamental problems with
US currency stability, especially against rapidly growing and lower leveraged emerging markets.
Then again, who in their right mind would prefer to bet on the Fed, rather than the Bundesbank (albeit a diluted Buba), long term
for currency stability?!
Trade and
currency stability are part of the «collateral damage» caused by the Federal Reserve and Treasury flooding the economy with liquidity to re-inflate U.S. asset prices.