Homestead mailing list

[Lisa Perry <lkvp AT floydva.net>]

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?