>However, a declining dollar will make the US less attractive for foreign
>investors, and that will limit the US capability to borrow and bankroll its
>deficit spending, which is a good news for those who wish all the worst for
>this administration. This will hurt the US more than the les competitive
>Euro imports will hurt the European economy, no? Doug?
A lot depends on what a falling dollar does to our trade balance. It could make imports more expensive and our exports less expensive. But if the action is mainly against the euro rather than the Chinese currency, then that effect could be mild. And a lot also depends on whether the U.S. starts to have problems funding the c/a deficit - which would force the Fed to raise interest rates more aggressively than it would otherwise, possibly pushing the economy into recession.
It's hard to forecast how this could play out - there are too many variables.
Doug