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Investment Portfolio

Wednesday, November 30, 2005

The U.S. Deficit and Global Liquidity

I recently wrote a post summarizing tech hedgefund manager Andy Kessler's book Running Money in which he posits a theory in which the U.S. Trade deficit is good because it lowers the cost of capital and drives capital gains. That thesis, he says, flies in the face of good economic theory. John Mauldin's most recent Out of the Box newsletter discusses this phenomenon in more detail and butresses Kessler's argument.

Mauldin manages hundreds of millions of dollars in capital, is a respected thinker, and has published several books. His newsletter has 1.5 million subscribers. The most recent newsletter can be viewed here: deteriorating global liquidity

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