Why the dollar is falling so fast (BBC)

[eppur_se_muova]

Why the dollar is falling so fast
Analysis
By Steve Schifferes
BBC News economics reporter

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For many years financial markets have worried about the growing size of the US trade deficit - the difference between the amount the US imports from the rest of the world, and the amount it can sell to the rest of the world.

That deficit has now reached a record $742bn, or 7% of the US economy, and shows no signs of diminishing.

At the same time, tax cuts and the war in Iraq have kept the US budget deficit at around $400bn despite the booming economy.
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The higher price of imported goods could lead to a hike in domestic inflation, and it could take several years before consumers switch back to buying more US goods.

High inflation, combined with the stronger-than-expected growth of the US economy, could force the US central bank, the Federal Reserve, to keep raising interest rates.
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more: http://news.bbc.co.uk/2/hi/business/4772049.stm

A concise, readable, none-too-technical article.


ON EDIT: also check out this link from DUer Demeter: http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=103&topic_id=210573&mesg_id=210573

[Poll_Blind]

1. Thank you for posting this! n/t

PB

[AX10]

2. thanks for posting.

[cliss]

3. Easy answer = as long as Bush is behind the steering

wheel, the US dollar will go down in value. Because of reckless money management, unbelievable squandering of assets, outrageous wars.

[CJCRANE]

4. The whole * cabinet needs to resign

and be replaced by an Emergency Steering Committee to get the US and world economy back on track.

(Don't they do something similar when a company goes bankrupt?)

[teryang]

5. The deficit is more like $600 Billion

But they like to count the FICA revenues as part of the Federal budget. That way the hugely harmful and disproportionate defense and security spending won't appear to be as ridiculously and dangerously bloated as it is. It is crushing health care, education, transportation, and every other need in its cancerous and deadly excess and accelerating the ruin of our currency and economy.