Tuesday, March 18, 2008 0 comments ++[ CLICK TO COMMENT ]++

The US Dollar...

(source: The Economist)


No doubt George Washington is crying over the fate of the US$...

So Are Foreigners...

But...

The fate of the US$ has always looked grim during crises is it different this time?

The fate of the US$ is likely destined to have a poor outcome... for the basic reason that developed countries have a harder time growing than developing ones. It is likely (just a guess) that the US$ will weaken against whichever country grows its economy in the future (such as China or Russia, or who knows which one). The following chart from the Federal Reserve shows how the US$ has done exceptionally well over the last few decades but I don't think it will repeat that performance...

(source: Federal Reserve Bank of St. Louis)

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