|
It is mistaken to presume the dollar is the same to all currencies, this is a misperception. Currencies are all relative to each other in a complex web of interrelationships between lending rates, credit ratings, macroeconomic balances, and politicial trends.
The dollar has devalued by 50% relative to gold, or you could say the gold price has doubled. Or that the gold-value of the stock market has halved. It does not mean that the dollar suddenly buys half as much butter in the supermarket. Macro-movements of dollar devaluation, is like the whole USA map sinking down a little bit, the dollar being that whole map. The stock market is a place on that map, and its relative movements are not really critical to the greater picture. Rather the issue is with interest rates across borders, and the likelihood of being paid returns.
In short, the dollar is gonna go down, and as it devalues, there will be lots of baloney spouted about "why", or how it affects the stock market. The way it affects the stock market, is that foreigners who have converted their money in to dollars at one rate to invest, will look at the returns of the investment minus the losses due to the falling dollar... when those losses pass a critical horizon, foreign investors in dollar assets will find better places to put their money. Then nobody will finance the deficit, and the dollar will ahve to correct to a level actually equal to the trade... (that collapse)
Its a huge question really, and i probably just made it worse. :-)
pues
|