Glen L.

Why Bad U.S. Statistics Are Good for the Dollar

Of the three rationales, the first (yen crossings) sounds like superstition, and the other two are based on unrealistic (perhaps chauvinistic) assessments of where the US now stands in the global economy. I fear that the dollar's current relative strength is illusory, and that the printing of trillions of fiat dollars will very soon result in devaluation via massive price inflation. Of course, just about all governments are "creating money out of thin air" now, and the inflationary effects will be world-wide, but the question is who holds all those dollars (many of which will wind up in the hands of our international creditors), what is their exposure as the dollar devalues, and what will happen when they start dumping those dollars back on the market? As opposed to US holdings (i.e., none) of the competing currencies?

Also, the assumption that the US has the world's most productive economy largely hinges, these days, on the crippled service sector. Where are all the factories that will lead the world out of recession?

Look East, young man.