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Let me get this straight. The dollar is going down because tame inflation data, and the Euro is going up because inflation there is accelerating? The idea that the dollar is going down because of the possibility of another rate cut is silly- a rate cut is feared only because of its inflationary effect. There is something more to the story- namely, sentiment. Sentiment against the USD is so strong that it is producing a mispricing of the EUR-USD.
1 posted on 09/28/2007 2:32:21 PM PDT by oblomov
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To: oblomov

It has little to do with inflation, and more to do with trade flows. I’ve gotta believe that the EU ministers are sweating now, though. They may have a harder time selling things in the US.


2 posted on 09/28/2007 2:34:25 PM PDT by Brilliant
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To: oblomov

It’s not sentiment...it’s that the U.S. Dollar has been **VASTLY** overpriced since the end of WW2 in order to prop up the foreign economies collapsed by that war.

...at our expense.

Now the Dollar is gradually coming back down to reality. Still a ways to go, though (China, are you listening?!).


4 posted on 09/28/2007 2:41:48 PM PDT by Southack (Media Bias means that Castro won't be punished for Cuban war crimes against Black Angolans in Africa)
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To: oblomov

The sentiment is that the U.S. is going down the tubes. Its people do not save, over-consume, many are mired in risky loans in a crashing real estate market, and it has a government which spends like drunken sailors while throwing endless amounts at Iraq.


5 posted on 09/28/2007 2:45:47 PM PDT by montag813
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To: oblomov

Actually tame inflation here and increasing inflation in Europe would correlate precisely with a lower dollar and a higher Euro. The relationship is direct and not inverse between values of denomination and inflation.


6 posted on 09/28/2007 2:47:41 PM PDT by Camel Joe (liberal=socialist=royalist/imperialist pawn=enemy of Freedom)
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To: oblomov

“after tame core inflation data suggested that the Federal Reserve has room to further cut interest rates.

“My guess is that the inherent resilience of the U.S. economy along with future policy actions, should they be desirable, will keep the economy on a track of moderate average growth and gradually declining inflation over the next few years,”

Well that is very good news. I hope he’s right. I’d like to see the US expand it’s manufacturing sector. And a cheap dollar sure helps.


10 posted on 09/28/2007 3:22:50 PM PDT by live+let_live
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To: oblomov
The dollar is dropping because the global supply is too high so foreign investors are divesting out of dollar assets.

When the treasury TIC flows have fallen below Federal spending, the federal deficit will explode. Then watch out below.


BUMP

30 posted on 10/10/2007 2:28:57 AM PDT by capitalist229
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