DO YOU CARE ABOUT THE DOLLAR?
Do you care about the fall of dollar against the euro? Here's why you should care and what might be done about it.
The exchange rate movement implies that the whole physical stock of Europe (land, buildings, machines, art, etc.) is suddenly worth 40 percent more in dollar terms than it was six years ago - and this of course is nonsense, given there has been no drastic difference in the performance of the relative economies in the last six years.
Many economic commentators argue that the dollar has fallen relative to the euro largely because of the U.S. trade deficit, and must fall further to rectify it, even though the United States has been running a trade deficit for years.
In fact, it has been the desire of foreign governments, companies and individuals to buy dollar assets, such as U.S. government bonds, which has caused the trade deficit. For them to obtain dollars to invest in the U.S., they must sell us goods and services.
