jhong,
<I fail to see the continued benefits of a much weaker dollar>
It would help the politicians because it would help the exporters, and this is easier than protectionism.
<Apart from a technical bounce here I do not think anyone has a choice: the US dollar is going down (gradually). Also, I think that the cat is out of the bag concerning the US deficits and the overvalued dollar.>
All currencies are going down. Debasement is one of the unintended consequences of globalisation, where jobs at home are priority #1 for politicians, whatever the increase in energy and other commodities it brings. Debasement will also bring low interest rates, for who wants to attract investment through high rates. Maybe the housing bubble keeps going for another while? Inflation must occur, though, as all nations experience rising costs for commodities and energy. Offshoring may stumble, though, as currency arb may become clouded. If this means business investment drops then productivity will cease to rise also. I think the additional uncertainty will be even more difficult for corporations.
Will it be good for gold? I think so, but first other nations need a taste of what the US has gone through. Perhaps next year, even for stronger currencies, in addition to commodities, gold will rise.
By the way, I put together some data on POG in Dollar Index. Sorry no graph (when will SI give us that?)
Message 20806318
David |
