Dollar Nears Record Low


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With the stock market booming and the trade deficit with China at an all time high as well, it is strange that the U.S. dollar is headed in a different direction.

A falling dollar, or any falling currency, doesn't really mean a lot domestically except when it comes to imports. A falling dollar should drive the cost of imports skyward; and, it, no doubt, has contributed to the rising costs for food and oil. So, why is the trade deficit with China continuing to grow? China's currency is tied to the dollar and is effectively falling with it.

That simple explanation of the trade issues with China is exactly why Clinton and Obama have endorsed plans to levy tariffs on Chinese imports until the practice of tying their currency valuation to the dollar ends.

What is more confusing is the rise in the stock market despite a falling dollar. The disparity in currency values encourages foreign investors to pull money out of the U.S. markets and encourages domestic investors to invest overseas. For that apparent disparity, I have no explanation.

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