The Dying Dollar

Nice job Fiscally Irresponsible Administration - I'm being kind. The dollar is plummeting and the rest of the world is concerned. Concerned is mild given that the US trade deficit is close to $500 billion, and America's current account deficit is at an even larger $600 billion, which is a broader measure of trade, as it includes investment flows.

With the dollar continuing to weaken, the "investment inflow" may dry up as investment opportunities in America become less attractive than other parts of the world.

Great read in the Guardian this week about the future of the US dollar.

The Daily Telegraph also reporter that traders have been selling the dollar since the US election, "with many fearing that George Bush's triumph heralds more loose fiscal policy". Danger, danger, danger!! And yet, we let him back in.

The state of the US budget deficit, which continues to plunge "into the red" unchecked, has also prompted concerns about the future of the US economy as a whole.

But, it seems that Bush is quite happy to "let the dollar fall further." The Bush government's policy on the dollar, "if it has a policy at all", seems to be one of "benign neglect", said Jeremy Warner in the Independent.

The International Herald Tribune also discusses the issue, particularly around China's interest, which begs the question - how long before bankers in Asia lose their appetite for the dollar?

There's a great article on Money Central that gives you 5 Ways To Play The Dollar's Decline.

They claim that the only solution in light of the deficit is for the for the dollar to sink so that 1) U.S. exports rise as U.S. goods and services get cheaper for buyers who makes their purchases in yen, euros or loonies, and 2) U.S. imports fall as the declining value of the dollar makes foreign goods and services more expensive for U.S. consumers and businesses.

I'm thankful I'm not raising children in this country right now.