"The chronic U.S. trade gap need not fuel a "precipitous" decline in the dollar, but the economy may be able to shrug it off if it did, Federal Reserve Chairman Ben Bernanke said on Tuesday.
"Although U.S. trade deficits cannot continue to widen forever, these deficits need not engender a precipitous decline in the dollar, nor should such a decline, were it to occur, necessarily disrupt financial markets, production or employment," Bernanke said in a letter to Rep. Brad Sherman, a California Democrat."
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Amazingly that this statement was well received by the markets initially.
