Harvard professor: let the dollar fall.

<P> Required to reduce the huge U.S. external deficit increasing pressure. .This not only needs the United States to improve national savings rate, but also need to be more competitive U.S. dollar </ P> <P> Group of Seven (G7) Group and International Monetary Fund (IMF), recent announcements, required to reduce the huge U.S. foreign .increasing pressure deficit. .This not only needs the United States to improve national savings rate, but also requires the U.S. dollar is more competitive. .Both are indispensable. .</ P> <P> end of last year, the annual U.S. current account deficit reached 900 billion U.S. dollars, equivalent to 7% of GDP. .This huge imbalance reflects the fact that the U.S. investment (including corporate plant and equipment and investment in housing) than the U.S. savings part of the GDP of 7%. .Therefore, the U.S. trade deficit down to sustainable levels, the United States must substantially increase national saving. .</ P> <P> good news is that U.S. household savings rate is beginning to rise and may accelerate in the coming year. .Over the past four quarters, the household savings rate has been negative, this is the United States since the 20th century, there have been 30 years since the exception not the level. .</ P> <P> the early 90s of last century, the U.S. savings rate began to decline because of rising levels of household wealth due to a corresponding increase in consumer spending. .The increase in household wealth in the stock market rose initially, but more important is that house prices double-digit growth. .In recent years, falling interest rates caused the rise in mortgage refinancing, increased this wealth effect. .</ P> <P> American families from their homes out of the value of spending trillions of dollars to cash, and a large portion of that cash into consumer spending. .</ P> <P> lead to the power of the U.S. savings rate is reversed. .U.S. housing prices from last summer's peak started to decline. .The Fed has changed its policy of low interest rates, causing mortgage financing rates in the past year increased by nearly one percentage point. .The amount of mortgage refinancing down 20%. .Household savings rate will return at least 2.4% in 2002, the level, this is only a matter of time. .</ P> <P>.