[tdw]

You guys are twixt a rock and a hard place.

You really need to lower interest rates in an attempt to kick start the economy but if you do the USD is headed for the underworld and what assets are not know owned by foreigners soon will be and at bargain basement prices.

This worked for you last time cos Japan, who bought up what assets they could at the time, then promptly took a bath themselves and you were able to buy a lot of them back and quite cheaply at that.

Somehow I doubt the Chinese will be quite so helpful this time round.

Meanwhile the USD is in all probability going to slide big time anyway and there is bugger all you can do about that. The only upside of that scenario is an improvement in your ability to export which will help employment and partially address your absolutely woeful trade imbalance.

What's more you run the risk that the USD will cease to be the international currency of record. It's place may well be taken by the Euro.

Sure as hell we are living in those proverbial interesting times.