Nintendo Wii Fanboy

Wait, you lied! The article mentioned nothing about that!

I guess that's what I get for commenting before I read the article...

I pity the fool who thinks the dollar won't bounce back; it's simple economics that it will. In theory, exchange rates are markets for currencies, so they are subject to the same laws of supply and demand as every other market. Right now, the dollar is low, so US exports are significantly cheaper to other countries. As we export more, foreigners send our economy more of our currency, therefore dropping the supply of USD outside the US. All else equal, lower supply creates a higher price and the dollar regains its value worldwide.

Granted, the money markets are subject to many more forces, especially oil which is sold in USD. But I give it 18 months before the USD is in decent standing again.

And I am that fool (it's been a long time since I had any form of macro economics). But your argument rest on one assumption, that people will sometime in near future start importing more US goods than they do know. We're already at the lowest point of the dollareuro rate (or highest depending on the way you look). The dollar has been loosing value ever since the introduction of the Euro. Yes, cd's and iPod's are cheaper to import now, but I doubt it has had much effect on US exports (but again, who am I to say that). Besides, it is also cancelled out by the negative effects of imports. Just look at how much money US companies have to spend on basic resources such as steel and oil, needed ofcourse to create exportable goods.

And with the current rise of Asian economies (China ofcourse, but also India) and some parts of the Middle East as well as the EU getting stronger of every front I still don't see the dollar bounce back that much. But it's still not really that low yet is it?

Maybe it's time for a Brain Training: Economy 101 game? ;)

You are right about the imports. Luckily, with the dollar becoming weaker, imports are more expensive for US consumers and therefore we buy less. Generally speaking, money markets are self-regulating and follow the natural cycle of peaks and troughs like the economy as a whole. The various factors that affect the markets determine how long and how high or deep the points are though.

So it's not a matter of if the dollar will bounce back but when. The US housing market is already bouncing back thanks to a massive influx of supply and therefore lower prices and financing rates. It makes me laugh when even the Wall Street Journal says this is "surprising"; it's freaking Econ 101 people!

No harm no foul though, and I hope you didn't take offense. I'm five weeks away from obtaining my BA in Economics so I kind of like to help people understand some things around here, though I try to keep it limited since this is NWF and all ;)

Guess we'll have to wait and see...

no offensive taken :)