[FoRK] How far will the dollar fall? (was: Demonizing the hedge funds...)

[Jeff Bone]

On Apr 18, 2008, at 6:49 PM, Russell Turpin wrote:
>
> Jeff Bone writes:
>> Bush has directly and indirectly done more to adversely impact our
>> economic present and future than any president since FDR. Between the
>> prescription drug benefit and the double-whammy of tax cuts and
>> massive, unprecedented deficit-fueled spending increases, the man's
>> done more to reduce the real wealth of most Americans than you can
>> shake a stick at --- and that's just for starters. (Per the latter,
>> the dollar-savings of the Bush tax cuts are offset by the portion of
>> dollar-devaluation tied to the deficit spending increases alone...
>
> I've often wondered how much of the dollar's fall was due to the Bush
> debt. Jeff is in a far better position to estimate this than am I. It
> seems to me the Iraq war also plays a role in this, independent of it
> being the cause of much of that debt, in the international loss of
> confidence in the US. "Soft" events also affect markets.
>
> So, Jeff... how much lower will it go?

This deserves a much longer answer, but the short version is --- I  
don't know, if I did I'd be in even better shape than I am. ;-)  (A  
second-order question, but very pertinent, is --- relative to what  
other measure of value?)  I agree with you that there are many  
covariant factors in this very complex equation, including the very  
significant impact of international good-will write-off stemming from  
the Iraq War (among many other things) as well as e.g. the deficit.   
My assertion above, which I can't prove but staunchly believe, is that  
there's a deficit-driven component to the devaluation, and that this  
roughly negates (at least) any savings in taxes paid to the Treasury.   
Net-net, though, the impact of the Bush Tax coupled with  
breathtakingly bad fiscal and monetary policy over the last 8 years  
has created a economic situation that we would be very lucky to see  
ourselves recover from in your or my natural lifetime.

More later...

jb