The dollar today
My friend Bob Murphy recently penned an interesting article for the Ludwig von Mises Institute on the "trade deficit" and the state of the dollar on the international scene. Bob is a libertarian anarcho-capitalist and an Austrian economist, and that school rarely gives much credence to the idea of a trade deficit, so I was rather surprised to see that, according to the available data, he predicts A Falling Dollar, After All.
"The dollar has fallen to historically low levels, and yet the current account deficit has continued to climb to historically high levels. It seems very unlikely to me that our present trade deficits should be attributed to the wonders of the US economy. Instead, it seems more likely that the artificially cheap credit of the early 2000s fueled various wealth bubbles, leading Americans to consume their capital without realizing it."