The US runs USD$45b trade deficit every months, year in year out. This deficits need to be financed, or balanced, by capital account outflow to the same amount:
goods flow into USA: $45b a month, balanced by
US Dollar/debt flow out of the US: $45b.
So for years the USD has kept flowing out of the US. These US dollars circulated around in the global market, thus there is no inflation or very mild inflation showing up in the US.
Now, the with reduced demand for the US dollars, these USD flows need to go somewhere. I ask you, where will the USD go?
The US dollar prices of some things somewhere will go up, and my expectations: : 1. US domestic inflation; 2. gold.
