12/22/08

The nonsense you hear about the dollar

A currency reflects the weaknesses and the strengths of a country relative to other countries.

The dollar has been collapsing since 2004 in anticipation of the dire events we are experiencing in the US.

A currency is never inflationary. It is the other way around. A currency reflects projected productivity and inflation differentials with respect to other countries. The country with the lowest productivity growth and highest inflation will have the weakest currency.

Interest rates have nothing to do with a currency. In the 1970's Brazil had the highest interest rates in the world and yet the real (their currency) was one of the weakest currencies.

The countries with the lowest inflation, highest productivity growth, and soundest economic policies have the strongest currencies. Make no mistake about it!

More, much more when you read older posts and subscribe to The Peter Dag Portfolio by going to https://www.peterdag.com/.

George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977

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