Of This & That...

Whither Dollar II?

Investors must beware of the fundamental changes going on in the U.S. dollar

In an earlier background note, I mentioned that the U.S. demand for world savings is falling off a cliff. Their twin deficits, the Fiscal Deficit (FD) and the Current Account Deficit (CAD), which used to be $560 billion + $700 billion = $ 1.2 trillion, has seen the CAD come down by 70 per cent, to $240 billion. If private demand for world savings is reflected in the CAD, while public/government demand is reflected in the FD, then quite obviously, the deleveraging of the U.S. consumer reflected below, would show up in the CAD.  

This article was originally published on January 16, 2010.


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