Clearly (albeit in coded terms) the Bush administration sees no merit in defending the dollar.
I would have thought the Bush administration is counting on the size of the US economy and the parochialism of the US population, most of whom do not travel outside the USA. If imports become somewhat more expensive will that be noticed?
It is more important to let the dollar slide and avoid further short-term destruction of industry, like the furniture industry.
US imperial stategy seems to be shifting slightly to a perspective that it will not defend the almighty dollar, when it can use its almighty military as a pre-eminent chip in international power politics.
In the long term this is foolish but it might be the best strategy for keeping the Republicans in power for the next ten years.
Chris Burford London.
----- Original Message ----- From: "Eugene Coyle" <[EMAIL PROTECTED]> To: <[EMAIL PROTECTED]> Sent: Monday, November 22, 2004 6:25 PM Subject: [PEN-L] Impact of dollar decline?
Reading about the dollar's decline leads to this speculation.
The dollar slides.
Consumer prices rise as imports get more expensive.
A second rise in consumer prices comes from revaluation of China's currency.
Interest rates rise as the old guard tries to choke inflation by tightening money.
Interest rates also rise to defend the dollar.
Federal budget is tightened to defend the dollar.
Supply-siders are nowhere to be seen.
Jobs are lost -- much faster than rising exports plus substition of domestic for imported products offsets with new jobs.
Loss of jobs and rising interest rates punctures the housing bubble.
Residential construction drops sharply.
Recession, which deepens as the above plays out. Recession obvious by April 2005.
Bush gets more aggressive internationally (Wag The Dog) as his approval ratings plummet.
World-wide economic troubles deepen as USA engine parks.
