the future of the dollar is?
Looking at the storm clouds gathering i’d say parity with the euro is long gone for the next 2 decades
1.5*â‚¬+ very soon?
the future of the dollar is?
Some analysts saying its going to slide further over the next few days if the housing figures coming out of the US this morning are bad.
Would yee like to give us a run down what that measn in real world terms for the folks out there?
oh boy where to start. Cats and dogs living together for one.
It’s none, any or all of the following:
- Lower european interest rates as cheaper US imports lower inflation
- Higher US rates as dollar falls and inflation rises
- US consumer cuts spending as import costs rise
- US industry cuts back as raw materials become more expensive
- Price of oil rises (or falls if US enters recession )
- Gold price increases as investors look to switch out of dollars
- Worldwide depression as the US consumer can no longer afford to buy our exports
- ECB unable to cut interest rates as inflation remains high, but also unable to rise as Euro rises to levels that severely hurt exporters
and so on. If it (the dollar slide) turns into a rout, it would be very very bad for all of us. A managed decline over a number of years would be better.
The end of the US Empire??
I think the world is preparing to decouple from the the dollar, this will pick up pace if the US pulls out of Iraq in a hurry. What’s going on is more a global rebalancing, Worldwide central banks have been bailing out the $ for so long they have a mountain of increasingly worthless paper.
blackswantrading.com/files/a … 050107.pdf
Look around you for the “made in USA” sticker, 15 maybe even 10 years ago, I had electronics equipment that was made in the USA, today its all “made in China”
Without foreign (i.e asian) support, it’s in the toilet, no doubt. You just can’t sustain a near $1Tn trade deficit forever.
Optimistic: Asian support keeps it close to where it is now, maybe a slow slide of a few percent per year. Steady as she goes.
Middle of the road: 5-10 percent loss against the euro per year (but less against the asian currencies which will try to follow the dollar down). This will hurt eurozone exporters pretty badly.
Doomsday: Hit 2:1 (or more) in a matter of months (once the slide starts) if the imbalance unwinding gets ‘disorderly’ (i.e someone big panics) or the Fed decides to inflate its way out of jail. This will be messy for everyone.
Longer term, i think the ECB will aim to keep a strong currency, the Fed will probably trade their ‘reserve status’ for a ‘fresh start’ by effectively defaulting on foreign owned debt (which handily is denominated in easily printed US$).
How likely is this?
â€œObserve calmly; secure our position; cope with affairs calmly; hide our capacities and bide our time; be good at maintaining a low profile; and never claim leadership.â€