[quote=briansd1]I think that America is still a paragon of political and economic stability as compared to the rest of the world.

The Dollar will remain the reserve currency for the foreseeable future.

Interest rates will move higher but the cost of borrowing will remain manageable because there is a glut of liquidity around the world as countries try to create corporate giants to compete against our own multinationals.

A lower Dollar will allow us to compete with the rest of of the world.[/quote]

I think that is an oversimplification of the scene in evidence.
Internal inflation (and, lets be honest, no inflation is strictly external) will benefit borrowers and punish savers.
I don’t think that is necessarily a bad thing at an academic level but if a large percentage of board executives start feeling broke, we will feel that in corporate actions (layoff, reduced outlays).

A cleaner way to create broad private deleveraging is to pass a law that restricts recourse on home loans.
Like “any loan for 1-4 units is non-recourse”.
That would keep the negative incentives that cause people try and avoid short sales but would leave banks in the position of either negotiating with due haste or foreclosing quickly.
That would tighten up distress markets and reduce informations sets significantly.