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December 19, 2006

Today's Dollar-Falling Post - Doomed?

-- by Dave Johnson

Is the dollar doomed?

There are plenty of big economic questions that will be answered in 2007. Will there be a global trade deal? Can the German economy shrug off the impact of higher taxes? Can China continue to grow at 10% a year? Will oil prices stay high or come crashing down? But they are all sideshows to the main event. The really crucial question for 2007 is whether it is the year when there is a run on the dollar. There are plenty of people out there - me included - who think the US currency is going to take a beating over the next 12 months.

... A high dollar meant exports into the US were cheap, and that kept both inflation and interest rates low. Easy credit terms meant that the US has had not one but two speculative booms over the past decade, the first in dot com shares, the second in the housing market. Growth has been artificially boosted and the trade deficit has exploded.

Now, though, things have started to change.

Go read

Posted by Dave Johnson at December 19, 2006 9:49 AM

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