I agree with the feedback loop analysis of strong US$, safe haven, etc. But nothing is forever. The British Pound had it's heyday, the Yen & the Deutchmark did as well. There is so much debt in the US (Federal, State, County, Municipal, and consumer), that when confidence finally wains, the implosion could easily match Japans during the past 12 years. There is a limit to the appetite of global investors to continue putting more and more eggs into an increasingly shaky basket. Gold might return to normalcy as a safe haven when the eggs begin breaking. Of course other currencies such as Euro, Australian & NZ dollars, Br Pound, Asian tigers & Chinese Yuan should revalue upwards vs the US too.
Steve
"Yet the story I keep hearing is that the
continuing strength of the U.S. Dollar, in spite of decades of trade deficits,
derives from the U.S.'s status as a "safe haven" for investments. Seems
like a bit of a feed-back loop: strong dollar > direct investment flows
to U.S. > weak trading partners > strong dollar > more direct investment
flows to the U.S. and so on infinitum. One could say that international
finance is a tribute system -- it is hardly reciprocal. For the system to
continue to function, the rich MUST get richer. If they don't, everybody
is put in jeopardy."
-- http://magma.ca/~gpco/ http://www.scientists4pr.org/ Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist.—Kenneth Boulding
