The dollar hit fresh lows against several currencies Thursday, raising pressure on global leaders to address worsening tensions among countries vying to keep their currencies weak and exports competitive.
The relentless rise of currencies from the Japanese yen to the Australian dollar is threatening to derail economic recoveries and global cooperation. In the six weeks since the Federal Reserve began discussing the prospect of further easing monetary policy, the dollar has fallen 7% against a basket of currencies.
Compounding matters are frustrations with the Chinese government’s unwillingness to allow its currency, the yuan, to significantly appreciate.
Do not think of this as a “collapse of the dollar.” America is being particularly successful in the present world economic struggle of [b]competitive devaluation[/b].
Along with the protectionist tariffs against China recently passed in Congress, it provides a powerful [i]You are HERE –>[/i] indicator in the [url=http://comstockfunds.com/default.aspx?act=newsletter.aspx&newsletterid=1187&category=MarketCommentary&MenuGroup=Home&&AspxAutoDetectCookieSupport;=1]Cycle of Deflation[/url].
That location — we are currently transitioning into full deflation — is also strongly reflected in a graph of the last three years’ monthly CPI reports from the Cleveland Fed. The very solid trendline for those date — R^2 = o.81 — indicates that we are now already in deflation whilst the backward-looking yearly CPI data indicate aggregate inflation barely above zero.
This cycle has about five years to reach bottom, and it will not be much fun. “The wise man sees danger ahead and makes preparations, but the simpleton continues on unaware and pays the consequences.” Prov 22:3
“and the smart person keeps cash on hand and runs away from debt”.
Won’t the dollar’s fall make American goods cheaper to overseas
purchaser’s, thus increasing their demand for our goods, leading
U.S. manufacturer’s to hire more workers ? A weak dollar is not
always bad. What am I missing in this discussion ?
Re #4
[blockquote] What am I missing in this discussion ? [/blockquote]
The inflation that this portends.