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

To: regli who wrote (75442)	12/12/2006 3:59:11 PM
From: aknahow	Read Replies (1) \| Respond to of 110194

Thanks, that is a great graph. In the long run you will probably be right. as you posted. "I expect the trade deficit to stabilize or shrink based on the current broad dollar trend." Paul Kem also posted, "With the dollar dropping, I expect that the trade balance will reverse." In fact is not the devaluation of ones currency supposed to improve ones trade, by making imports more expensive and exports cheaper? But in the short run the graph shows the dollar falling and the trade gap increasing. It would seem that decreasing ones ability to import and increasing ones ability to export should reduce the trade deficit. But the U.S. will have to export more goods just to get the pre devalued dollar value coming in. If the dollar declined 30% over several years exports have to rise 30% just to break even if imports were not reduced. Will other countries also devalue or refuse to revalue? It is going yo be interesting to see how it all works out.