TTurk

Strong Dollar Impact Felt Worldwide

If the financial crisis we are in was domestic instead of worldwide, the dollar would be in the toilet. The dollar's relative strength recently is only the result of many parts of the world being in worse shape than the US.

The US situation is tenative at best. If consumers and businesses seriously resist the government's temptation to increase borrowing to increase consumption, we may be in for a long period of stagnant growth. The gov't will be resistant to reducing the money supply growth that has been provided and ultimately inflation will be our plague and the dollar will slide.

On the other hand, if low interest rates entice enough households and businesses to resume their habit of borrowing to spend, all will be well and as the economy grows, the Fed will be able to sell bonds, reduce the money supply and control prices.