Wednesday, December 03, 2003

A dollar and two dimes

For eight months, the cost in American dollars of one euro hovered between $1.10 and $1.18, but two days ago, for the first time, the cost penetrated the $1.20 barrier. As I type this, BBC radio has announced a new high cost of the euro against the dollar: $1.22.

As I've said before, I'm no economist, but it cannot bode well for the US economy that its currency is declining in value, even if it may mean in the short run that Americans may find foreign-produced goods pricier and hence be more likely to buy domestic products. The inevitable inflation, the commensurate rise in interest rates (affecting mortgage payments on adjustable-rate mortgages, affecting monthly minimum payments on credit card debt and so forth), and the lower purchasing power of a dollar will beat back the recent economic "recovery."

This may come to pass quite soon. I can only hope.

Update: "Put simply, the dollar is in dire distress."

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