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Strategies & Market Trends : Booms, Busts, and Recoveries
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To: westpacific who wrote (1746)1/14/2001 3:04:41 PM
From: Tommaso  Read Replies (3) of 74559
 
If the US economy weakens and the dollar weakens at the same time, a lot of exporting countries will be stuck with things they can't sell and can't use, either.

After an initial depression and failures of export businesses, maybe new effort will got into improving their own capital and making things they need. I think that they have been trying to emulate the Japanese success story of 1950-1980 of building an economy based on exports. Perhaps they should consider the current state of the Japanese economy.

I can't quite figure what this might mean for the dollar. There must be immense amounts of literal hundred-dollar bills plus bank accounts denominated in dollars around the world. Some of this has come back as investments in the US, much of it as speculative buying of US stocks.

I guess the dollar is ultimately redeemable not into gold, but into US assets: land, factories, resources, anything that can be paid for in dollars. I guess an attempt to "redeem" the dollar in this way could lead to considerable inflation in the United States. If the atmept is made, however, to change the dollar into other currencies, the result could be deep and rapid devaluation. Maybe bopth of these things at once.

I think I will go on holding my euro deposits and euro warrants as a hedge against or a speculation on such events, even thought he euro is already up a good bit against the dollar.

Any thoughts on these thoughts?
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