August 9, 2008

The Basics of the Falling Dollar

Filed under: Economics — Bottom's Up @ 1:42 am

A nice article by Martin Feldstein covering in very simple language why the dollar needs to continue to fall, and more importantly the considerations including the price of oil and domestic inflation which would affect how much the dollar needs to fall.

Also, I would think it would be interesting to see which way the dollar curve goes in the initial period after the new president is elected. On one hand, Obama is expected to work towards ending a resource sapping war in Iraq which is steadily adding to the deficit and so would be good news for the dollar. On the other hand, his populist promises and Big Brother spreading the money love all over the place wont bode well for inflation and the deficit.  Instead, one would think a republican would be good. While Wall Street would prefer a republican, John McCain would love to continue his war and start a few more if he can help it, and cares trifle little for the economy at home. Now since the people who would affect the dollar are not on Wall Street but probably somewhere close to the Birds Nest stadium, it would depend on what they think of John McCain.


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