The Falling Dollar

Some of you may be interested in the article here. (Washington Post may require sign-in.) For some of you, this may be an article to breeze through, but probably not for most. Let me offer a couple of quick selections from it, and we will discuss as time permits:

Many economists think the global recession is winding down or is already over, which has encouraged investors to dump dollars to buy stocks and other higher-yielding assets. "As we have stepped away from the abyss people have a healthier appetite for risk," said Marc Chandler, global head of currency strategy at Brown Brothers Harriman.

The Federal Reserve's strategy of keeping a key interest rate near zero to help get the economy back on track has given investors further incentive to search for alternative investments that pay a higher yield. They have poured money into emerging markets, which are expected to rebound quickly. ...

Gold has become attractive as another aspect of the Fed's strategy to jump-start the economy -- creating billions of dollars in new money to buy government debt and mortgage-related securities, also known as quantitative easing -- as well as doubts about the government's ability to get spending under control have stoked fears of inflation down the road.

Again, we will have a few weeks to sort out all the reasons and implications here. For the moment, ask yourself this: what are the advantages and disadvantages of a strong dollar? Would you rather have a relatively "strong" dollar with a great deal of purchasing power, or a relatively "weak" dollar with less purchasing power? Why?

We'll have plenty of chances to discuss.