[Homestead] 4 years later ...
lkvp at floydva.net
Wed Dec 1 12:26:19 EST 2004
Don Bowen wrote:
> China has refused to revalue its currency. This take away most of the
> advantage of a dropping currency. Huge trade deficients with china
> are increasing the worry of world wide investors upon which we depend
> on for more than 43% of our bond sales. Tax cuts have made us noted
> less valuable to american wealthy and huge trade and budget deficients
> have made those same bonds less valuable to foreign investors.
> The net result can lead to inflation. A definite cooling of the
> economy will occur as interest rates climb. But unless interest rates
> climb more will pass on US securities.
I've read the administration wouldn't mind the dollar falling further to
help ease trade deficits, but it's a double-edge sword. If the dollar
falls much further, how long will foreign investors continue to hold
dollars that earn less on their investment? I've read we're going to
have a problem no matter what, and what remains to be seen is whether
it's an abrupt jump over a cliff, or whether it's a gentler and steady
tumble down a long hill. Brought to mind a twisted version of Jack and
Jill going up the hill carrying the pail of water. Japan and China have
much control over our fate.
Am I being too negative?
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