The Residential Real Estate Crash Index Message Board

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Strategies & Market Trends : The Residential Real Estate Crash Index

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To: Amy J who wrote (28337)	3/18/2005 5:47:44 PM
From: Elroy Jetson	Read Replies (5) of 306849

As the value of the US Dollar has declined, our Current Account deficit has grown worse - which is contrary to simple economics, where the real world is ignored with a simple ceteris paribus. Our Current Account is the net flow of current transactions, including goods, services, and interest payments, between the US and other countries. In the real world, say televisions, once your television industry has been bankrupted and shut due to foreign competition, you do not magically start exporting televisions again simply because the value of your currency declines significantly. We could export serial home re-financers, but the demand for that in most other nations is quite limited. The "inflation part" of a declining currency is obvious. As the value of the currency declines, the price of imports rise. People either pay the increase or substitute inferior locally produced goods.

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