In today's paper there was an editorial addressing the two schools of
thought on the fall of the Dollar. One school says it will drop a bit
further then stabilize at its right point. They are predicting mild
inflation and a difficult adjustment period but little beyond that.
The other school claims a much more dire scenario. Paul Volker (the fed
chairman before Greenspan) is expecting a further slide to as much as 40%
of its current value. He is saying that if the slide is not arrested then
we will see a spike in interest rates, a slowdown of economic growth, and
heavy inflation. He is concerned that the fall is endangering oil
countries profits and will they demand higher prices and a shift away from
the dollar. Foreign investors who have kept up the dollar up may quit and
shift investment to other currencies such as the Euro.