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Those are all good arguments for a continuing strong $US. What concerns me is the fact that, even with the US economy at the top of its game for the last several years, the budget is still not balanced, despite the contrary fabrication commonly reported by the government and echoed by the media. The national debt still increases with each passing second.
Now, the minute this country moves into recession -- and, if we're lucky, it will "only be" a recession -- the deficit will again balloon due to falling tax receipts at all levels of government and increasing social outlays to mitigate economic dislocations. At best, in terms of fiscal balance, it will amount to two steps forward and one step backward. However, there is really nothing preventing two steps forward and two steps backward, or even three or four steps backward.
Then, in terms of a competitive dollar, one only needs to remember that, at face value, the US is indeed the world's largest debtor nation. This fact plus an increasing budget deficit and huge, persistent trade imbalance will very likely seriously erode confidence in the dollar. Add the potential for an accelerating increase in prices in world commodities from their current extreme low levels to the mix and a rapid decline in the dollar becomes even more certain. |
