Cheap dollar "overshooting"

Washington Post columnist David Ignatius spells out in "Fiddling while the dollar drops" a scenario where the dropping value of the dollar against other currencies (particularly the euro) could drive Asian central banks to hedge by diversifying their reserves, which in turn could further weaken the dollar on exchange markets, which could drive the Fed to boost interest rates to protect the currency, which in turn could drive down the stock market. Ignatius' thesis is that the cheap dollar is politically expedient at present, and thus there is concern by a number of experts that the market value of the dollar could "overshoot" as it declines, triggering these undesirable consequences.

Comments

[shikira]

Hi, yes there is someone else who shares your fascination!
I too have been reading along these lines and find it so interesting.
I like your site but in one of your articles you said that the euro is not backed by anything, I dont think thats true, its backed by 15% gold I thought.
keep up the interesting work.