One of the best parts of being a journalist is having an excuse to call strangers and ask them all kinds of questions. Recently I called Benn Steil, senior fellow and director of international economics at the Council of Foreign Relations, a think tank in New York, and asked him about the possibility that the United States would enter a state of deflation.
Steil discounts the probability, while allowing for the possibility, and says the root of all the market uncertainty is the massive, global-deleveraging process that we are still going through. In short, the vicious cycle of losses inducing selling, leading to more losses and more selling.
“This clearly has some ways to run, Steil says. “It illustrates one big feature of financial globalization nobody had really appreciated before,” that being the Triffin Dilemma.
