Our USD Policy

With the confirmation of U.S. Treasury Secretary Henry Paulson, the general thinking of this administration has changed from Treasury Secretary O’Neil

“in favor of a strong dollar(?) I can’t imagine why anyone would think to the contrary.”

to a weaker dollar would lower Americans’ appetite for imports, make U.S. exports cheaper on global markets and therefore help shrink the deficit.

What Americans should expect is the inflation of rising prices. We have outsourced the manufacture of a large number of consumer items and we may never manufacture them again in this country. We will see prices rise on those items. A lower dollar is expected to shrink the deficit, when in fact it will rob value from foreigners who hold our debt.

Everyone in the financial arena knows the USD is going lower. The trick will be, manage it another 30% lower over time without inducing a panic to sell. We need to raise the temperature of the water gradually, so the “frogs” don’t realize too soon that they’re cooked. (Hat tip to Le Metropole Cafe)

U.S. Treasury Secretary Henry Paulson
U.S. Treasury Secretary O’Neil”
Gold Trade Deficit USD Mover Mike


Speaking of U.S. Treasury Secretarys, did you read what former U.S. Treasury Larry Summers said? Lawrence H. Summers has cautioned developing countries that the return “will be zero” on those Treasurys after inflation and currency changes!

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