This is nothing more than an interesting footnote to history. The Financial Times ran a column in 2003 that talked about the problem of the U.S.
versus other countries in terms of exchange rates of the dollar.
At the time (certainly not as drastic as today) the dollar was falling.
The writer of The Dangers of the Dollar's Decline gave three scenarios as to how the
then situation could play out.
The first is that our dollar would rise as the Euro and the Yen depreciated due to excessive buying by Asian countries to finance America's debt
because of short-term attractive exchange rates.
The next, and in his view, best scenario would be for Asia to shun accumulating any more dollars and instead let their currencies rise against the
dollar, thereby shrinking our deficit.
Unfortunately, it seems our leaders have elected to follow the third, and most disasterous course. I'll put it in his words:
The second possibility is for members of the capital-account zone to join
the Asian mercantilists in supporting the US currency. The monetary
consequences would be expansionary. But though such an expansion
would be welcome, it would be insufficient to reduce the US current
account deficit. The result would be a faster global economic expansion,
probably ending in worldwide overheating and a dollar collapse.
Hmmm...that pretty much described the past five years.
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