http://livingoffdividends.com/2006/08/31/wifes-professor-weighs-in-on-dollar-devaluation/ Join me on my journey to achieve financial independence through dividends, passive income and investments Tue, 13 Dec 2011 07:31:37 -0800 http://wordpress.org/?v=2.8.1 hourly 1 http://livingoffdividends.com/2006/08/31/wifes-professor-weighs-in-on-dollar-devaluation/comment-page-1/#comment-313 mOOm Sat, 02 Sep 2006 02:20:00 +0000 http://www.livingoffdividends.com/2006/08/31/wifes-professor-weighs-in-on-dollar-devaluation/#comment-313 Well it depends which currency you are comparing it to. Against the RMB that number is in the ballpark. Against other currencies like the Euro, pound and Yen - they are free floating and so in terms of an equilibrium the dollar is not overvalued. In terms of what the money buys I think it is clear that prices for most things are lower in the US. The Economist's Big Mac Index is a good rough indication. Actually recently I have been wondering whether selling Euros and Sterling and buying USD would be actually a good move. Certainly the Yen now does look cheaper than ever. I have done well by having the majority of my money in AUD. But short term it isn't looking that hot. Bottom line, I don't think 40% overvalued means much... Anyway even if the USD falls in value against foreign currencies that has only indirect and more limited effects on inflation in the US. Well it depends which currency you are comparing it to. Against the RMB that number is in the ballpark. Against other currencies like the Euro, pound and Yen – they are free floating and so in terms of an equilibrium the dollar is not overvalued. In terms of what the money buys I think it is clear that prices for most things are lower in the US. The Economist’s Big Mac Index is a good rough indication. Actually recently I have been wondering whether selling Euros and Sterling and buying USD would be actually a good move. Certainly the Yen now does look cheaper than ever. I have done well by having the majority of my money in AUD. But short term it isn’t looking that hot. Bottom line, I don’t think 40% overvalued means much… Anyway even if the USD falls in value against foreign currencies that has only indirect and more limited effects on inflation in the US.

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