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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Freedom Fighter who wrote (109857)	11/9/2007 8:52:53 PM
From: Freedom Fighter	Respond to of 132070

KT, I want to clarify this further. IMO, there are many thing that impact the direction of a currency over short periods of time. Economic growth, interest rate differentials, political stability, current account issues, budget deficits/surpluses, long term demographics etc.... These things often have a cyclical component to them. IMO, the merits of a particular administration's policies often can't be correlated to what's happening while they are in power. They often inherit circumstances from those in power before them that cause these cyclical things (recessions, recoveries, currency movements etc..) to occur while they are in power even though it's not their fault. It's often just the luck of the draw (good and bad). What you want to focus on is how they coped with the things they inherited and how they coped with the things that happened that were out of their control, not just the state of affairs at the time they were in power. There has been a series of ups and downs in the dollar in recent decades that IMO were mostly correlated to cyclical events. However, the very long term down trend is entirely based on monetary policy that has tended to favor economic growth, job stability, market stability, Wall St, etc.. OVER the value of the currency. That is all the Fed's doing. Now it is possible to argue that the Fed is influenced by the administration in charge, but Greenspan did the exact same thing from the moment he was appointed by Reagan through the re-appointments by Bush, Bush, Clinton, Clinton, and Bush. (87 crash, early 90s LBO and commercial real estate crisis, Asian crisis, Nasdaq and general stock market collapse, and September 11th). Each episode set the stage for the next bubble and next round of overly easy money that continues that long term downtrend of the dollar. IMO, to blame the current Bush administration for re-appointing him is preposterous. He was re-appointed by all those folks because the media and Wall St had unjustifiably elevated him to God status. Now, some of the current downward movement of the dollar is cyclical and the rest is the result of Bernanke continuing the policies of Greenspan (also somewhat cyclical). That's something I am even willing to excuse Bernanke for to some degree because he INHERITED a mess from Greenspan. It isn't his mess that is causing him to lower rates to what eventually might be negative real levels again. I fully expect that within 2 years or so (maybe sooner), the current excesses in sub prime and elsewhere will be worked through the system, real rates will rise again, the dollar will then have a cyclical rally within its longterm downward trend. That rise will have little or nothing to do with the administration in charge at the time because as long as we stay on this monetary path, the long term trend will remain down. I hope that is clear. We shouldn't be debating silly things. Some of Bush's mistakes are pretty obvious, but he was also dealt a pretty rotten hand from his predecessors. He also didn't cause 9/11 any more than those before him. He just dealt with some of those problems poorly (but in ways that others would have duplicated with some details changed). He is not responsible for the long term decline of the dollar unless you are willing to place equal blame on everyone else that re-appointed Greenspan and encouraged his easy money bailout policies.