The dollar is taking a pounding against the Euro. A direct result of the fiscal policies of the president which amount to spending without end and racking up enormous debt. He has said he would halve the deficit in 5 years he also said that Iraq had weapons of mass destruction. And while, supposedly, half of American actually trusts this man, the rest of the world has the good sense not to. And from what it looks like they have put their money where their mouthes are and are devaluing our currency because we are unlikely to balance our budget or repay this astronomical debt any time soon.
My guess is that the next move will be from the Chinese who will un-pin the their currency from the dollar. They have no incentive to track with the dollar and take the hit for our lack of fiscal conservatism.
Posted by jherr at December 3, 2004 01:24 PMDoesn't the Chinese pegging their currency to the dollar keep the products from becoming more expensive in the US? Yes, it also means that they what they take in (dollars) are worth less around the world but when our markets are larger than anyone else's how much difference does this latter notion make particularly in the short term. Indeed, if one wanted to bankrupt the USA this would be one way of doing it, a bit risky on the part of whoever it is but a method none the less.
Posted by: mjpjr227 at December 3, 2004 04:37 PMThat's only one side of the Chinese equation. The Chinese also want and have to buy products from other countries. So as their currency is devalued for no fault of their own, they will start to see their buying power decreased.
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