A Get Rich Slow Scheme

A cheap dollar is no fun for Americans, but as my latest column for The Week points out: it may bring us out of our recession.

Work more. Save more. Export more. Import less. Consume less.

That's America's economic future. It's not a fun formula. But it will get the job done.

The U.S. economy crashed in 2008 and 2009 in a classic balance-sheet recession, like 1929 in the United States or 1989 in Japan.

Balance-sheet recessions happen after long booms. Asset prices rise. Households and corporations borrow and borrow to buy and buy. Suddenly the asset prices cease rising. Suddenly everybody realizes the debt burden is too heavy. The game of musical chairs abruptly stops.

For recovery to begin, the ratio of debt to income must decline.

That process has already started in the United States.

Personal savings rates have jumped, from virtually zero in the mid-2000s to 5.5 percent in the early months of 2011.

Collectively, Americans are selling more to the rest of the world and buying less from other nations. U.S. exports hit an all-time high in March 2011, and are up more than 21 percent from 2009. Meanwhile, the non-oil trade deficit is dropping: down 6 percent in the first quarter of 2011.

These steps are uncomfortable, but they are necessary. Yet much of the current political debate seems intended to suggest that there is some other way out. ...

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