IT'S HARD TO BELIEVE THAT THE WEAK DOLLAR IS NOT CAUSING SOME COMMENT IN THE ECONOMIC COMMUNITY...
THE ACADEMICS ARE SAYING...WELL, THE WEAK DOLLAR WILL BOOST EXPORTS...! THIS IS THE "BY THE BOOK" APPROACH TO CURRENCY ANAYLSIS...
BUT I DON'T SEE IT THAT WAY... FOR ONE...THE US SIMPLY DOESN'T "MAKE THINGS" ANYMORE... THE US HAS A THIRD WORLD LIST OF MAJOR EXPORTS...!
MAINLY AGRICULTURAL PRODUCTS...SCRAP METAL AND PAPER...AND SOME AEROSPACE DEFENSE...THAT'S MOSTLY IT...
AND WORSE, MOST COMMODITIES ARE "PRICED IN" DOLLARS...GOLD AND OIL BEING ONLY THE MOST NOTABLE.
SO IF THE DOLLAR WEAKENS...PRICES FOR THESE COMMODITIES WILL GO UP...BECAUSE THE COMMODITY DIDN'T WEAKEN...ONLY THE DOLLAR.
HENCE THE COMMODITY MUST BE "WORTH MORE" IN DOLLARS JUST TO "STAY EVEN" ON THE "LADDER OF VALUES"...
AND THIS IS LIKELY TO CAUSE A "PRICE ESCALATOR" TO KICK IN WHERE EVERYTHING GOES UP TO SIMPLY "MATCH" THE INCREASES IN OTHER COMMODITIES...
AGAIN...JUST TO "STAY EVEN."
NOW THIS ANALYSIS OF A WEAK DOLLAR IS SURE TO HAPPEN...! IT'S HAPPENING EVEN NOW WITH OIL AND GOLD AND OTHER COMMODITIES...WHICH ARE SOARING OMINOUSLY ON THE EVE OF THE FED MEETING...
THE NOTION THAT THE US WILL "SELL MORE" ABROAD WITH A WEAKER DOLLAR IS NOT FOR SURE.
AND THOSE WHO TOUT BETTER EXPORTS BECAUSE OF A WEAKER DOLLAR WILL LIKELY BE PROVEN WRONG AFTER A FEW QUARTERS OF DATA ARE RELEASED...
