The falling dollar

[Ted Kayes]

The dollar is not falling because of the deficit that the U.S. government
is running.  Actually, on percentage basis it is smaller than Japan's and a
number of other countries.
The difficulty is the trade imbalance.  Americans, individuals,
corporations and the government buy about $30-40 billion more each month
overseas, than we sell.  It is this trade imbalance of about $400 billion
that is so weakening the dollar.
This can be offset by borrowing abroad, typically selling Treasury bonds
and notes.  But with the falling dollar foreigners are less interested in
buying U.S. bonds.  If the interest rates were raised, they would again buy
the bonds.  But for political reasons, interest rates are not likely to be
increased until at least April and probably longer.
I would suggest that the dollar will fall further.  Perhaps to 75 centimes?
Glad that Cheri and I walked the Camino in 2003.

Happy New Year one and all,

Ted Kayes