Stocks and bonds both tanked the week before Thanksgiving, as the dollar fell again and oil and gold jumped, the latter to its highest level ($449 an ounce) since 1987. Investors may recall that was the last time we had a dollar crisis, as well as a little stock-market episode known as Black Monday. The markets rallied Monday, as the dollar firmed and oil dropped. But we hope the point has been driven home that investors don't bet on countries that debase their currencies.
All the more so when the nation's leading policy makers seem blasé, not to say clueless, about the matter. Treasury Secretary John Snow has been roaming the world saying that he favors a "strong dollar" policy even as he lobbies for a weaker dollar against Asian currencies. Investors who observe what Mr. Snow does tend to discount what he says.
And.
I remember that. I also remember that if you had the guts to buy on Tues. or Weds., you would have been financially rewarded beyond your wildest dreams. I also remember that despite many financial experts predicting the crash would cause a depression, the real economy went booming right along.
Still a weak currency is not a good thing. If your currency is too strong, it is easy to weaken it. If your currency is too weak, it takes bitter medicine to strengthen it.