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What's the last four years showing in that chart Todd?

You are dense, aren't you?

The chart shows that some years the dollar strengthens as the deficit increases and some years the dollar weakens as the deficit increases.

But all the author and you would like to dwell on are the three and four years of intervening from '98 to 2001/2

You mean when the trade deficit more than doubled from $230 billion to $468 billion while the dollar rose by 25%? If that's not proof that you're right, I don't know what is. LOL!!

It can be accounted for by a number of factors,

So sometimes factors make the dollar go up and sometimes factors make the dollar go down. While the deficit constantly increases. Makes me wonder, "Where Is the Dollar-Deficit Relationship?" Fool.

Like I said before, you just like to hear yourself talk, don't you? You never add any information to the discussion. At least no correct information.

What's the last four years showing in that chart Todd? You are dense, aren't you?

No. You are. The Dollar Declines from approximately $120 to $85 dollars.

You mean when the trade deficit more than doubled from $230 billion to $468 billion while the dollar rose by 25%? If that's not proof that you're right, I don't know what is. LOL!!

LOL right back at you. The state interventions in currency of the Chinese, the Japanese, the Pacific Rim, etc "pegging" or ...worse. Example, when the PRC first set their peg...they did a massive depreciation of their currency to establish their price advantages. And then kept it locked tight since...with only some lip-service about floating it in the last year. A number of Pacific Rim competitors to China, felt forced to follow similarly, albeit far less aggressively, since they are in trade for rather different reasons.

So sometimes factors make the dollar go up and sometimes factors make the dollar go down.

NOt just sometimes. Sometimes fundamentals of supply-demand are pure economic, overwhelming the factors of state intervention.

While the deficit constantly increases.

And the Dollar is more or less constantly decreasing the last five years now...not just four...

Makes me wonder, "Where Is the Dollar-Deficit Relationship?"

See above... Fool.

Talking about yourself again Todd.

Like I said before, you just like to hear yourself talk, don't you? You never add any information to the discussion. At least no correct information.

In fact, I am the only source for accurate information in your dark world. You just can't handle the truth.

This whole conversation of yours, gentlemen, seems rather silly.

Trade deficits don't cause currency devaluations, and vice versa. Rather, both figures reflect a complex interplay of economic funadmentals.

Basic trade theory tells us that a shift in economic fundamentals that will push up a country's trade deficit (for instance, a decreased domestic savings rate) will also, other things equal, tend to push down a country's currency. Why? Well, it's very simple. Whatever is causing the trade deficit is causing an increase in demand for imports relative to exports and domestic goods. This in turn increases demand for the foreign currency relative to domestic currency, since imports ultimately have to be paid for in foriegn currency.

So yes, other things equal, shifts in the trade ballance will usually be accompanied by shifts in the exchange rate. But it's not a causal link. The same thing that causes a change in the trade deficit tends to effect the exchange rate.

You also have to remember that there are many, many variables that determine the exchange rate. A simple two-variable graph like the one posted doesn't tell you anything, because it neglects all these other factors, like monatary policy, which will tend to confound your inferences.