as i said before, the biggest concern with a falling dollar would be a hard landing, which could happen ...however we have low interest rates, low inflation, and still some excess capacity in manufacturing, so if there was ever a time for a falling dollar, this would be it.
i'm not saying there couldn't be a sharp shift in foreign investor sentiment whereby a steep selloff in the dollar could occur...but that would be for them likened to the proverbial cutting off of one's nose to spite your face, europe's exports would falter (germany and france are just ever so *barely* escaping a recession), japan would return to a recession (i do think that even the japanese don't have enough currency to prop up the dollar in such a scenario, though i certainly could be wrong, as they seem to have an unending ability to maintain their dollar/yen equilibrium), even china would problems with their exports...
in other words, the other world economies have every reason (self interest) to maintain an orderly falling dollar ...
foreign investors have in general been getting a better rate of return on their investments in the US vs. europe or japan... |
