Monday, November 19, 2007

Where goes the dollar?

I found interesting the following commentary on the weakening US dollar by Harold Maass, a columnist for the magazine The Week. (Adam Smith is the 18th Century Scotch author of The Wealth of Nations, in which he wrote of the "Invisible hand" of economic systems. Jim Cramer is the blustery TV commentator on the economy and the stock market.)

The dollar can decline along the Adam Smith path or the Jim Cramer path, says David Ignatius in The Washington Post. In the "Adam Smith version," natural market mechanisms help the dollar make its necessary downward slide gradually. China starts saving in other currencies, the declining greenback shrinks our deficit, and then "the dollar eventually will begin to rise again." But in the "Jim Cramer version," the dollar's "gradual adjustment" turns into a "stampede," fueled by "emotional, volatile traders." The Fed raises rates, we stop consuming, and the U.S. sinks into a recession. The sinking dollar can be "part of the cure," but Smith makes the medicine go down easier.

1 Comments:

Blogger rapa said...

Miss you, Marshall. May you RIP.

Friday, October 03, 2008 2:27:00 PM  

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Mycroft Watson is the nom de plume of a man who has seen many winters. He is moderate to an extreme. When he comes to a fork in the road, he always takes it. His favorite philosopher is Yogi Berra. He has come out of the closet and identified himself. Anyone interested can get his real name, biography, and e-mail address by going to "Google Search" and keying in "User:Marshall H. Pinnix" (case sensitive).

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