China still will not mean that American investors will escape any pain from the rebalancing of the nation’s current account deficit

But an orderly reduction in the current account deficit and the avoidance of a sudden break with China still will
not mean that American investors will escape any pain from the
rebalancing of the nation’s current account deficit. A reduction in
this deficit still will mean a weaker dollar, higher interest rates,
and higher consumer prices.
We also look into what we think is the biggest threat to the
economy and American investors: the next economic downturn,
the next recession. There are two reasons a slump would be so
scary. One is that a slowdown, which can put downward pressure
on prices and inflation, could mean that deflation will become a
threat. The other is that it might be more difficult than usual for
the Federal Reserve, the nation’s central bank, to restart the economy
the next time it stutters because the housing market will be
so battered.