There is an interesting article in the NY Times this morning titled ” Dollar Dips Below 100 Yen as Markets Tumble” . The dollar has tumbled yet another 1.6% over concerns with the health of US Financial Sector and the Fed’s [possibly necessary] actions to avoid or mitigate a recession.
This is really becoming a tough pill to swallow. The dollar has been on a constant decline since the Iraq war began and our fiscal policies are doing nothing more than fanning the fires of inflation and the devaluation of the dollar. This recent action by the Fed hd a very short term effect of giving the stock market a quick shot in the arm but now that the euphoria has worn off the money markets are reacting as one would expect. Yes, pumping a huge amount of dollars into the market will surely ease credit and perhaps spending in the short term, but it will also have a profound effect on the actual value of those dollars. When you have a fixed amount of good and services being chased by more dollars they’re worth less. That causes the devaluation of the dollar which we see very clearly in the London Markets today.
I’m not really sure how much the dollar has dropped over the last 5 years or so, but I hear from some local lawyer friends that the amount of business they have for people applying for citizenship has dropped off sharply. It turns out that as the dollar sinks in the US and the dollar in their home countries improves in no longer becomes a good business decision to work in the US and send dollars home.
They can actually go back home to a stronger job market and higher paying jobs. So much for the Immigration Problem. If we keep this up, not only will the immigrants be leaving but we’ll be seeing more US Corps expanding in overseas markets rather than domestically.