Friday, October 8, 2010
Dollar crunched again
Unemployment was constant, the dollar fell to its lowest point since January, GAP changes it's logo today was not a remarkable day for the economy except for the breaking of the 11, 0000 point barrier by the Dow Jones. "The U.S. currency fell to 81.8 yen, its lowest since April 1995, and was trading at $1.39 against the euro. The dollar index tumbled to 77.2, matching a low last seen in January." One economist noted that these recent statistics are looking more and more indicative of a double-dip recession. The Fed is looking to buy Treasury bonds to alleviate the situation and lower interest rates, if only partially. These coupled with the possibility of inflation is a potent mix for expected thoughts and behaviors by consumers.
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These statistics do appear to be heading in what could be a double dip recession because they are statistics working in reverse to repair the economic damage already experienced in the United States. On the other hand, these statistics are not completely significant enough to say that the double dip would come at all, even if little action was taken. At the moment, they just prove to be negative for the U.S. economy. I think it is a crucial move by the Fed to buy Treasury bonds in order to put more money into the economy
ReplyDeleteAs we have learned in class, if the dollar is lower compared to other country's, more foreigners will buy are products. Also, if other currencies are higher than ours, many americans will try and buy domestic products because they will be cheaper.
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