Could Europe’s Woes Benefit the USA?

Karl Smith thinks so:

If the euro zone gets caught in a deflationary spiral, real European interest rates will rise and the euro will tend to appreciate.

Under this scenario, Eurozone exports become increasingly less competitive against American exports. At the same time, the struggling European economy will likely reduce it oil imports.

This creates dual positive pressure for the United States which would see cheaper energy at the same time as more robust demand for manufactured goods.

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