link here to article
An unorthodox view of the need to reduce deficits. For most people this view will defy their common sense. Most people do not understand the relationship between trade deficits and foreign purchases of US treasuries. They get the dollars by running surpluses with us and they use the dollars to buy treasuries. His point on rational markets is also difficult for people who believe that markets are rationale. Sometimes they are, much of the time they are not. If the bond markets are rationale today, the low interest rates they are paying for treasuries is irrational if they expect inflation. Of course, if the markets are irrational, it is impossible to develop a policy to please the market makers. I would have liked to have watched his presentation in order to view the reactions of congressmen who don't really understand finance or the way markets really work.
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