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Originally Posted by SentToStud
Sometimes the dollar weakens and it has nothing to do with domestic factors. It happened in the mid and late 90's mostly due to the very high growth of the Japan and European economies, especially Germany. It's a different part of the world these days, but the concept is the same.
And when the dollar is strong, it's not correct to generalize that's 100% positive. When the dollar is hot, it makes it more difficult for US corps to compete in foreign markets. With increased globalization of world economies, this tempers the effect of a weak dollar. A weaker, or weakening dollar also make US investment more attractive to foreign markets.
It's hard to generalize. But I do agree that it makes a lot of sense to be increasingly invested in certain foreign markets and in securities of US firms with larger exposures to foreign markets.
I have no idea why people save so little in the US. With all the bills people have to pay it's insane they do not pay themselves first (savings). I don't get it at all.
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While I agree we shouldn't generalize we should be aware that the asset inflation in the stock market right now is a direct result of money being too cheap.....And in the past, our economy was simply stronger than the others and we could get away with borrowing at will and still have a strong dollar....This is different. If the Euro ever gets to 1.40 people will take notice and it could have a more rapid decline....Also, I don't think we get there anytime soon strictly because what will happen is that the FED will raise, not lower, interest rates to defend the dollar and weaken gold....If it works, it won't work for long. Excesses take a long time to wring out and I firmly believe we are headed for a very ugly recession within 16 months.