Post-election US Dollar Policy Summed Up

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The following is from the 23 Nov 2004 Daily Reckoning home page.

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If anyone loses money on the falling dollar, it won't be our fault. We have warned readers for years.

Now, says Alan Greenspan, it won't be his fault either.

With the elections behind them, the Feds see no further need to deceive voters. The voted have been counted; the dollar be damned.

The dollar is going to fall, Mr. Greenspan told the world last week.

And we're not going to lift a finger to stop it, added Treasury Secretary Snow.

On the news, the dollar fell to 1.3/euro. When it will stop falling, no one knows.

Why have the Feds abandoned their own money?

The answer to that question, says our old friend Kurt Richebächer, can be found by studying a chart of U.S. corporate profits since 1991. Profits, he reminds us, are the result of capital investment. In order to make a profit, you have to buy new machinery, train new workers, and create new products. When you stop making capital investments, profits disappear....