Moreover, we do not know how long net imports and US external debt can rise before foreign investors become reluctant to continue to add to their portfolios of claims against the United States. At that point, the safety valve of net imports could narrow or close.
It is conceivable that these two buffers can continue to absorb an excess growth of demand over potential supply for quite a while longer. However, the significant uncertainties surrounding these new economic forces counsel prudence. We need to be careful to keep inflationary pressures contained: The evidence that inflation inhibits economic growth and job creation is too credible to ignore.