evilgenius wrote:It isn't just the doomer crowd who are interested in where the dollar is. But, yeah, they don't have faith in what has stood. They want to invite people into their personal lives. Being right about a falling dollar is one way, I guess. There are easier ways, but I'm guessing those haven't gone so well.
But where the dollar is has an impact upon whether exporters from the US to other countries benefit. Contrary to what many believe, the US does make a lot of stuff. Some of it gets sold overseas, or to the south. Everything south of the US is heavily dependent upon what the dollar is doing. As far as those things go, I've always heard that the worst sorts of changes are changes that happen too fast. It's ok if the dollar moves ten cents against the euro, as long as it doesn't do it overnight. It's best if companies can make purchasing decisions and see the raw materials through to production without some huge price change disrupting things either way. That kind of slow speed.
All good points.
I was thinking more in terms about the specific USD vs. CAD in the short run, vs. interest in the USD (or any major currency) in the long run.
Even as a teenager, I would be amused to see how whether the dollar was rising or falling, someone was complaining about it. A strong USD tends to be hard on emerging market economies, so emerging markets generally don't like that. A weak dollar lowers US purchasing power, so naturally lots of people don't like the inflationary and cost of living impacts of that. Trade and trade trends are huge economic impacts over time, though most people don't think about them often, including me.
And absolutely right on the pace of change issue. When things move gradually, it's easy to adapt. When things move fast, it can be really nasty to people locked into contracts, for example, unless one is fortunate enough to have made the right hedges ahead of time. Little wonder that commodities contracts have become so popular for business hedges, or that the FX exchanges do over $5 trillion in volume a day on average.
Looking at a long term DXY chart vs. a long term WTI chart, crude makes the USD appear VERY tame since 1973 when things got "interesting" in the Middle East re global oil supplies.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.