Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Qualcomm Incorporated (QCOM) -- Ignore unavailable to you. Want to Upgrade?

To: rkral who wrote (119383)	5/28/2002 1:15:24 PM
From: kech	Read Replies (1) \| Respond to of 152472

carranza and rkral - This is something that has always been puzzling to me as we've run trade deficits for a long time, yet the dollar has been strong for a similarly long time. There are two accounts that determine the price of the dollar. One is the trade surplus or deficit the other is the capital account. The trade deficit determines the direction over long periods of time but if their is net investment in the US (as there was during the 90's due to the tech boom) the capital account can drive up the price of the dollar even while there is underlying trade deficit. As returns on capital fall in the US, the capital account investment goes elsewhere, this stops holding up the dollar, and the dollar falls. People who say the market always falls because of a falling dollar have the causal mechanism backwards. It is really the falling market and return on capital that has the dollar falling.