Am i the only one that feels like the Bush Administration has intentionally not tried to defend the dollar? Is this their way of mitigating the cost of petroleum in other countries and minimize the outrage over the war in Iraq? On every front it seems as if the Bush Administration is pursuing inflationary Fiscal Policy leaving the Fed to try and contain the inflation genie. With the inflationary fiscal policies of the Bush Administration can we expect the dollar to gain a little momentum and save the day without the Treasury Departments help? Someone help me out here because I want to go long $'s but am scared that despite the need for a stronger dollar we may actually have an administration that is intentionally shooting us in the foot.
So, are you just figuring out that there has been an inflationary bias in the system since 2000? Do you think this is accidental, or perhaps by design? If you want to go long the USD for a short term punt, by all means do. But do you think that long term fundamentals favor dollar longs? Do I ask too many questions, or do I make myself clear?
Your perception is reality. Forget the retoric coming from treasury. They want a weak dollar. Treasury believes the dollar is too strong vs the currencies of our trading partners. They think having a weak dollar will help solve our current account deficit. And there is another overriding reason. The long range plan is to inflate our way out of the debt. There is a little problem though. Our creditors are not stupid. They are going to demand a higher interest rate if we pay them back with junk. This is why the Fed's job is going to be very difficult. At best they will hold inflation down some but they will be powerless to stop it. Two counter forces must be balanced. Our need for higher interest rates to finance our huge deficit, and our need to inflate (weaken) the dollar to improve the current account deficit and thus reduce our need to borrow. The unconscionable 2 trillion cost of the war has really put the Fed between a rock and a hard place. (And don't forget, oil priced in dollars goes up as the dollar goes down. About 20%+ of the increase in oil price in US markets is due to dollar depreciation.) With Regards to inflating out of the debt, which do you think is more politic. Taking an extra 5 bucks from you in taxes or making the 50 bucks in your wallet worth only $45. You get to the same place either route, but only one of these two methods of taking your money is pollitically feasible.
idunno...who said it was anyone's "administration's" job to support a floating currency? Isn't the nearest thing to that responsibility the job of the Fed, which is independent of any administration? I thought so.<P>On the other hand, get your hoity-toity exotic vacations in, because what we need is a dollar index at around 75 on a spike down. That will end all the yapping about "twin deficits." it will also kick the yuan free and force the reds to quit stealing our money with currency manipulation. so hang on to your hats.
A weak dollar is good for the economy. Let's us get rid of more of those reprehensible defense contractors that we don't need by selling them to the Brits. Also good for the domestic wine industry. We can drink more cheap American wine with the money we took from the Brits, who now repair ALL of our worn-out combat vehicles.
You badly need some background in history. Excessive currency depreciation is mostly a harbinger of coming catastrophe.