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December 08, 2004

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» http://newmarksdoor.typepad.com/mainblog/2004/12/very_interestin.html from Newmark's Door
Very interesting economics blog: Stumbling and Mumbling (the man clearly knows some economists). Start with a post on the budget deficit and the falling dollar. [Read More]

» Dollar puzzles from Tom Rants
In which it is argued that federal deficits not only don't explain the falling dollar, they ought to be helping stop the fall. I'm not sure why anyone needs to look at budget deficits to find an answer myself - the real interest rate in the US is lo... [Read More]

» Is it the deficit? from Academic Scribbler
Here's an interesting take from Stumbling and Mumbling. In part: Did I learn nothing at all at university? I’m prompted to ask by the increasing tendency – of which the BBC is part – to blame the falling dollar on... [Read More]

Comments

Peter

As I understand the argument, it is that a worryingly high budget deficit produces a big capital account surplus. A big one of those means a big current account deficit, which will for all the usual reasons mean a depreciation in the dollar.

Robert Schwartz

www.nytimes.com/2004/12/15/business/worldbusiness/15deficit.html

In Today's NYTimes:

"The European Commission froze its threat of fines against France and Germany on Tuesday, granting the two biggest economies in the euro zone an extra year to bring down their bloated budget deficits. . .

In October, the commission forecast France's budget deficit next year to be exactly 3 percent of gross domestic product. Germany's was forecast to reach 3.4 percent. . ."

Of course this explains why the Euro is so high.

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