Saturday 2 December 2006

Cost of Dollar

Recently, I have been noticing that it is becoming cheaper every year to pay back my US college debt since the dollar is now at some 14-year low compared to both EUR and GBP. So from my college loan perspective it is good that I actually waited a bit.

And then noticed this web site called Cost of War set up out of Boston.

Actually, when you come to think of it, this is only the piece financed through taxation, so this doesn't cover the piece financed by Treasury bonds since apparently the actual cost is around
$2 Trillion.


Now, I wonder what is driving down the dollar? Could it be that you have to buy goods to finance the war in dollars and then whoever is selling you the goods needs to (eventually) sell the dollars again in the FX market?

Interestingly enough, it also turns out that the last time the dollar was this low was when we had the 1992 Gulf War.

I don't see many currency pundits making the link though, so I guess I need to start my own hedge fund soon.

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