Ellen wrote:
>I have to disagree with the proposition that the US
>current account deficit might presage flight from
>the greenback, capital outflows and financial collapse.
>Though the scenario is plausible on the surface, it
>overlooks one thing. Increasingly, the world's wealthy
>count their wealth in dollars.
I agree: much more likely that a flight from the greenback is a simple but
quick fall in its value. For example, the real trade-weighted major
currency index for the dollar fell more than 20% from 1985 to 1986 and more
than 11% from 1986 to 1987. I don't think that this would involve a
financial crisis (or "collapse") as much as a stagflationary shock.
Jim Devine [EMAIL PROTECTED] & http://bellarmine.lmu.edu/~jdevine
