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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Knighty Tin who wrote (19263)	10/3/2004 9:10:40 AM
From: Rarebird	Read Replies (2) \| Respond to of 110194

<The current account deficit vs. GDP is going to grow worse> To correct the present US current account deficit (which widened to a record $US 166.2 Billion in the second quarter of 2004), the US Dollar would have to fall about 20 percent on a full trade-weighted basis. On the surface, that might not look too bad, for the US. But for all current FOREIGN holders of US Dollars or US financial paper, it would amount to near catastrophic losses when measured in terms of their own national currencies. For Americans, it would amount to having the global purchasing power of the US Dollar fall by 20 percent. A 20 percent fall in the value of the US Dollar would actually increase the price of US imports by 25 percent. If the $US fell, say, from 100 to 80, returning to 100 is actually a 25 percent rise.