Coded gray.

Monday 29 December 2003

Fractals

Pic of the day: Random pretty fractal.

Talking down the dollar?

There was no big terror attack on the USA during the holiday season. Of course, this could be due to the orange alert with its heightened control of air traffic and a generally watchful populace. After all, the point of such a warning is to avoid the attack, not to be able to say "Told ya!" after thousands have died horribly.

In other news, the dollar keeps sliding rapidly against the Euro, despite the previous quarter's American growth being the strongest in two decades. Economists cite the large trade deficit, lack of foreign investment and fear of terrorist attacks.

To a non-economist, a strong dollar sounds like a good thing and a source of pride. You may now expect Alan Greenspan and W. Bush to be the targets of e-mails saying "Do u want a stronger currency? ffsj nm". But things are not quite that simple. A weak dollar makes American products more competitive both at home and abroad. And most auspiciously, it reduces the real value of the foreign debt. Normally the big downside is higher inflation; but if you are threatened by deflation, this turns into a benefit: You export your deflation. Of course, your trading partners are not likely to be too happy. But if you don't do anything to make it so, if it just happens ...

Of course I wouldn't accuse any democratically elected government of using fear of terrorist attacks to improve a mismanaged economy. And even though the democratically elected president of the USA never was sworn into office, and some other guy was[1], I still don't think they would pull such a crazy stunt. Well, actually that's not exactly it. It's more like, they probably wouldn't know enough about economy to realize that the dollar needs to take a serious dive to mend the wounds from an over-expansive economic policy. Alan Greenspan knows, of course, but he would never dabble in politics outside his job at the Federal Reserve. And the relationship between him and Bush has been so cool, there was talk of replacing him at a time.

So in conclusion, it is most likely a lucky coincidence. Even so, it is just what the economist ordered. Here's to a rapidly sliding dollar in 2004! Cheers! Down with the $$$!


(Note: I have never denied that W. Bush was constitutionally elected. It's just that the constitution emphasizes the power of the states, and not the direct power of the people. The USA is a federation, not a nation-state, and this is one of the results.)


Yesterday <-- This month --> Tomorrow?
One year ago: Two magics
Two years ago: Amber simulacrum
Three years ago: Revolutions then and now
Four years ago: Various hot items
Five years ago: Celestine visions

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