Dollar Diplomacy

Doug Henwood dhenwood at panix.com
Mon Jul 19 14:06:50 PDT 1999


Max Sawicky wrote:


>Why would this market be grounded in fundamentals,
>especially something as relatively esoteric as
>productivity differences, while others are prey
>to animal spirits?

Because a currency is fundamentally the price of a nation's goods on world markets, and relative prices are determined over the long term by relative productivity differences. The oscillations around the fundamental values are the play of animal spirits.

Doug



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