WHEN ANYONE FROM the Bush administration reiterates the government’s belief in a strong dollar he is now greeted with derisive laughter, rather than a mere behind-the-hand titter. The actual White House position is best summarized as favoring a dollar as strong as market forces permit. And that is very weak indeed. So weak, that India will no longer accept dollars in payment for admission fees to the Taj Mahal and other sites: they want a hard currency, their very own rupee. And famous supermodel Gisele Bundchen is demanding payment in euros, rather than dollars, for slouching down the world’s runways.
Almost every dollar indicator points downward. Start with Ben Bernanke and the Federal Reserve Board’s monetary policy committee. It is true that some Fed governors are worried that oil, food, and commodity prices are rising so rapidly that inflation is the number one threat to the U.S. economy, even though “core inflation” (excluding food and energy prices, which makes the core inflation rate irrelevant to anyone who eats and drives) remains “relatively restrained,” in the words of Goldman Sachs’ analysts. But the inflation hawks are in the minority. The chairman is under pressure to lower, not raise interest rates.
