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Politics : Foreign Affairs Discussion Group -- Ignore unavailable to you. Want to Upgrade?

To: Michael Watkins who wrote (150859)11/3/2004 12:28:25 PM
From: Sun Tzu  Read Replies (1) | Respond to of 281500
>> The all time low USD will happen much faster than that...

Yes. Markets are discounting mechanisms. The real problem is that at some point, the falling dollar will have a very diverse effect on foreign debt market for USD. That this has not happened in full force yet is to a good measure because foreigners are afraid that liquidating their positions will push the dollar lower and cost them even more.

BTW, I saw a Soros interview a couple of years ago when most people thought USD has gone low enough. He said he thinks the descent will continue for a few more years. That prediction was on the money. I wonder what he has to say now.

For those who care to dig more...

Too bad I can't find longer term charts. Btw, while you are at it, feel free to check the demgraphic trends.

To: Michael Watkins who wrote (150859)11/3/2004 12:38:41 PM
From: GST  Read Replies (1) | Respond to of 281500
The USD is like a balloon -- kept aloft by hot air but weighed down by the dead weight of the debt. So far, hot air has been enough to keep it from falling severely, but the air is only as hot as the economy, and the weight of the debt is likely to increase substantially now that the electorate has opted for the "free lunch" crowd. The dollar has moderated in value, but the decline has not had much impact -- yet. However, a sharp fall over a relatively short period of time would be a shock both at home and abroad. Buckle up.