Wednesday, January 12, 2005

I stumbled across this great chart by Robert Scott of the Economic Policy Institute showing the relationship between the US dollar and the US trade deficit since 1980. Everything seems in order per standard economic theory, until it all begins to go haywire beginning in 2002. The data only goes through 2004:II -- simply draw out the red line futher up and the black line further down for an update.

Tell me again how the falling dollar acts to reduce the trade deficit . . . ?


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