Will the Dollar fall in 2007?
2006-12-04 05:03 PM | Posted by Tejvan Pettinger | Permanent Link | economics
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Even if you have no interest in Economics (which is quite understandable) a significant devaluation of the dollar will effect us all. On the plus side American imports will be much cheaper. A new Apple laptop now looks quite affordable. However the devaluation could cause serious problems for the world economy if it continues to fall.
Basically there are serious imbalances in the US economy. They have a very significatn "triple" deficits.
- A Current Account Deficit (trade deficit) of $700 bn
- Govt debt (spending more than they receive in tax)
- High levels of consumer debt.
Combined with falling house prices. This doesn't make a good combination and could lead to a loss in confidence in the American economy which will translate into a falling dollar.
If you are interested in reading more. Here is an article at my Economics Blog
