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To: Moonman62
"How do you figure the dollar is overvalued?"

The market's correction mechanism for trade imbalances is currency devaluation. If a trade imbalance persists, the currency hasn't been devalued enough.

So to answer your question, I figure that the Dollar is still overvalued because our trade imbalance hasn't materially shrunk.

14 posted on 11/10/2004 1:13:06 PM PST by Southack (Media Bias means that Castro won't be punished for Cuban war crimes against Black Angolans in Africa)
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To: Southack
So to answer your question, I figure that the Dollar is still overvalued because our trade imbalance hasn't materially shrunk.

If there is a significant time lag in that indacator there could be problems. I think the high price of oil has also delayed any effect. Since all oil is priced in dollars and we import more of it than ever before, that complicates matters.

I think focusing on imports and exports as an economic indicator is just asking for disaster, although it's popular with politicians all over the world. I have two theories. One is exports are seen as a sign of virility, like penis size, even though they only make up a small fraction of the economy. The other is currency manipulation is one of those areas where governments can easily do manipulation and get away with it.

15 posted on 11/10/2004 1:31:35 PM PST by Moonman62 (Federal Creed: If it moves tax it. If it keeps moving regulate it. If it stops moving subsidize it.)
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