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Politics : Ask Michael Burke
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To: Knighty Tin who wrote (108328)7/11/2007 8:14:32 PM
From: Freedom Fighter  Read Replies (1) of 132070
 
KT,

This is the way I see it.

The major problem with the dollar is that every time one of the Fed's bubble's blows up and threatens a recession, real interest rates are dropped into negative territory to protect the economy. That's essentially begging people to borrow more money. The idea being to increase the money supply to bail out the economy. Continuing that process spells long term doom. Bush inherited the Greenspan and Clinton mess.

Things like budget deficits, economic growth differentials, interest rate differentials etc... are usually short term economic factors that also impact the dollar in the short term. But from my perspective they are often meaningless. I'm not a trader and don't think they have much place in politics other than for the liars trying trash the wrong people.

I sort of think Bush had to reduce taxes when the Clinton/Greenspan stock bubble burst in order to prevent a disaster. I might have cut different taxes, but I don't think it was a bad move. If that impacted the dollar among traders I don't care.

The rapidly increased spending in combination with cutting taxes was a huge mistake though. It wasn't necessary to increase spending that much. That put us on a path of structural deficits instead of cyclical deficits. Over time that could also be a disaster for the dollar if not corrected because the deficits could eventually be monetized. But I think this can be turned around quickly if we get someone mildly responsible next.

The only thing I worry about when it comes to the dollar is expanding money, not yearly moves based on other cyclical changes.
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