The Crux of the Issue

Doug Daschle (via CNBS) had a very interesting comment regarding the inflation/deflation debate and the role of specualtors.
In essence he says that from 2002 to 2007, everybody loved specualtion because the specualtors were buying stuff that people were generally long-houses, equities, bonds. Now the 'speculators' /investors are buying stuff that people are generally short-oil and food. Hence we now have a situation where US consumers are long stuff that is going down -due to an oversupply of houses, stocks and bonds (funny how that is a the laws of supply always rule in the long term). To make things worse, US consumers are short the stuff going up-food and oil. Talk about a margin squeeze.
The only way out of this mess is for the US consumer to cut back on their consumption and to earn more money. That will be tough given global wage arbitrage. Time will be required and it could be a long time.