Straw man alert.
What the author above fails to understand (being generous and not presuming that he deliberately ignored facts) is that the Dollar isn't fairly valued.
That's the fundamental flaw of the crowd that is criticizing the current fall of the Dollar...that the Dollar was fairly valued in the past.
It wasn't.
For decades, the U.S. Dollar has been artificially propped up by foreign governments and central banks. The U.S. has even *cooperated* with such behavior by coordinating currency interventions.
...
Now fast forward to today: all in the world that the U.S. is doing now is simply *not* intervening in the currency markets to aid Asia and Europe in keeping the Dollar propped up.
That's it. We're simply not continuing our old behavior of intervening in the currency markets to keep the Dollar overvalued.
In the absence of U.S. market intervention, Asia and Europe are left to hold up the Dollar on their own...and they simply don't have economies large enough to maintain that trick forever.
They want to keep the Dollar propped up, but they can only hoard U.S. Dollars for so long, and the more that the Dollar falls, the worse position those foreign governments are in (with regard to keeping the Dollar propped up). As the Dollar falls further, it becomes even *more* difficult for them to push it back up.
...And the more that the Dollar falls, the more expensive their exports to the U.S. become, making them less competitive.
Eventually, the Free Market will prevail and the U.S. Dollar will be fairly valued again (after a substantial fall from its earlier heights). At that point, the trade deficit will reflect a Free Market balance.
We're not quite there yet, however. The Dollar still isn't fairly valued. For one thing, the Chinese Yuan to Dollar peg has to be broken first.
But even when the Dollar falls to that Free Market valuation, it still won't be "cheap."
We're not talking about Argentina or Wiemar Germany here; we're merely talking about the Dollar finally becoming fairly valued again - instead of maintained at orbital altitudes.
