Nice job Mx,However, the dollar will not decline until the...

Nice job Mx,

However, the dollar will not decline until the government stops selling bonds at interest rates well above the interest rates in other countries.

I did not know this until I read Tony Makin's article in today's Australian.

To save time I quote one of his paragraphs. (.high commodity prices are beyond 'policy makers' control ..another key factor influencing the dollar ((the price of bonds)) is not.

"That is the capital inflow chasing the tens of billions of government bonds issued to fund the large budget deficits of recent years. Speculation in these bonds funded by borrowing at near-zero interest rates on offer in the US and Japan could well be causing a short-term exchange rate bubble.

Returning the budget to surplus mainly through spending cuts would reduce this source of upward pressure on the exchange rate and alleviate the pain it is causing many trade-exposed companies.

It would also act against strong inflationary pressures on the non-tradables side of the budget." The Australian pg 12 March 1, 2012

(On a lighter note: I am sure Professor Makin will be pleased to know that I support and respect every word he wrote.) HC42