Professor Mark J. Perry's Blog for Economics and Finance
Posted 7:25 PM Post Link
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GEE -- and all you libertarians/conservatives keep claiming that the Obama deficits will cause the dollar to collapse.Actually, the dog that did not bark is that US dependence on foreign capital is collapsing as personal savings soars and private credit demands contracts.
Doom & Gloom: Today vs. 1974/75At this time, current declines in Industrial Production are similar to the 1970s, but nowhere near that of the 1930s. The world today is in rough shape, but (like in crisis past) is likely trapped in an irrational spiral of fear and panic.http://www.planbeconomics.com/2009/02/23/doom-gloom-today-vs-197475/?preview=true&preview_id=690&preview_nonce=d253c45889
Enjoy it while it lasts. The dollar index shows the value of the dollar relative to a basket of currencies. The U.S. is doing better i.e., less worse than a number of those currencies. It's all relative.
Re the Doom & Gloom article mentioned on that Plan B economics website Anonymous mentioned---I replied: "Unfortunately fear and panic can be quite valuable tools to advance both domestic and foreign policies...depending upon one's interpretation of realpolitik, of course."
Obama's deficit's haven't started yet. The stimulus was just barely signed and the omnibus spending bill for the rest of the year is still in Congress.And people are still saving like crazy. Some are even storing cash in safes.Just wait until the velocity starts picking up again at the same time trillions in spending gets out there.
Time to take that trip overseas! Oh wait, I can't afford to.
"And people are still saving like crazy. Some are even storing cash in safes."If they were smart they would be saving gold in safes!
The dollar could rise by virtue of being the tallest midget, but if the deficits force interest rates up and the cost of our debt stops being close to free, it wouldn't matter.I'd worry about that more than the price of the dollar.
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Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan.
Perry holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University near Washington, D.C. In addition, he holds an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota. In addition to a faculty appointment at the University of Michigan-Flint, Perry is also a visiting scholar at The American Enterprise Institute in Washington, D.C.
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