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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Jim Willie CB who wrote (1942)	3/13/2004 1:31:29 PM
From: Tommaso	Read Replies (1) \| Respond to of 116555

>>>US$ resumes downward course AS SOON AS ECB cuts rates<<< Well, currencies are so fickle that I guess that could happen. But it would not make much sense for it to happen, since the only thing that makes a fiat currency worth anything is the interest rate it can command, along with a scarcity relative to other fiat currencies. Case in point: the Australian dollar where the higher interest rate has led to much appreciation against USD. But the USD may be so overvalued that interest rate changes, at least small ones, cannot affect its course much. In the longer run (i.e. over the next 5 years as opposed to the next 5 months), the main event will be decline in purchasing power of all fiat currencies against commodities. And the move in commodities will be exaggerated when they start to be perceived as stores of value.