Friday, May 05, 2006

Fallout From A Falling Dollar, Currency's Decline Could Mean Higher Interest Rates, Higher Prices For Imports - CBS News

Fallout From A Falling Dollar, Currency's Decline Could Mean Higher Interest Rates, Higher Prices For Imports - CBS News:
If the dollar were to continue falling, it could have wide ramifications:

# It could imperil the economy next year because Fed Chairman Ben Bernanke might have to defend the currency with higher interest rates.

# A lower-valued dollar makes imports more expensive, possibly ratcheting up the inflation rate. But it could also stimulate U.S. exports, thus providing more jobs.

# This summer, Americans traveling abroad will feel as if everything is expensive. However, foreigners coming to America will feel as if the country is one giant Wal-Mart.

[...]

One way to keep foreign investors interested in U.S. dollars is to raise interest rates, says Chan. But the risk, he says, is that "we slow down to the point where it may even become a recession."

The large U.S. budget deficit doesn't help, says Bryson. "The U.S. is spending more than it produces, and to the extent government is spending more, it becomes a compounding factor," says Bryson.
"One giant WalMart?" Yuck! Roll back the corporate welfare grants and payoffs to the rich, and the problem is nearly solved.
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