Wednesday, December 10, 2003

Speeding Growth & Falling Dollars

Of Accelerating Economic Growth and Falling U.S. Dollars

Max Fraad Wolff is a Doctoral Candidate in Economics at the University of Massachusetts, Amherst,

The data flow has been dizzying and confounding of late. The U.S. boasts China-like levels of GDP expansion without the accompanying structural shifts, let alone industrial revolution. All of this leaves the minority of commentators and investors who seek a meaningful answer to the out of style “why question” to crack wry smiles and wring hands. Here is my contribution to the frightened smirking and head-in-hands flow of information that confronts those of us silly enough to seek understanding from news and data streams.

The swelling U.S. economy is ever more “debtophilic” and few seem concerned about lending. Lady Liberty welcomes any and all foreign surplus savings to her warm and beckoning shores. As the world extends $2 billion per work day, the currency in which this debt piles up is quietly sinking against the monies of our major floating currency trade partners. Never mind that this is a very dirty and managed float-there is much central bank policy swirling in these “free markets.” The balance of this action acts to cushion and manage dollar decent. Our still trade over-weighted dollars are a faith-based initiative. So too, it would seem, is our recovery. ...Dollar Slide Continued

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