Wednesday, November 24, 2004


While We Were Feasting

Dollar Continues Plunge

Money Quote:

"In that scenario, not even strong US data can provide the dollar respite, with analysts now widely predicting the euro hitting 1.45 dollars and a two dollar pound is just around the corner. Meanwhile, there is even talk that the dollar could drop to 85 yen. "

"So what" many might say. Why am I so concerned about this? First, it shows a growing belief that the U.S. isn't serious about managing our countries finances (a sad shame with a Republican majority!) and will lead to two things. First to stop a free fall in the dollar, the Federal Reserve will have to boost interest rates at a faster pace, slowing economic growth. Second, all these wondefully inexpensive gifts and gadgets we'll be out buying on Friday will be substantially more expensive next year. Most of us may be to young to remember the late seventies and early 1980s when interst rates (mortgages) were in the teens and inflation was running 7, 8, and 9 percent annually. To put it into perspective, an annualized inflation rate of 7 percent over a ten year period of time will cut your purchasing power in half.

Looks like it's back to the future for us. Get ready.

Comments: Post a Comment

<< Home

This page is powered by Blogger. Isn't yours?