Of course, American consumers may react by buying fewer of the gadgets they didn't need in the first place. Policy makers would unlikely be satisfied with such a reaction. Not only has Bernanke called for inflation to be higher, but he has argued that the economy needs to grow by at least at 2.5% a year, just to keep unemployment from rising. Any consumer slowdown may be countered with more money printing or other monetary or fiscal initiatives. There is a real risk we may be getting more than we are bargaining for.
Axel Merk is president & CIO of Merk Investments LLC and manager of the Merk Hard, Asian and Absolute Currency funds (www.merkfunds.com).