Re: Federal Budget Deficit Expected to Reach Over $300 Billion Next

["Dr. Bruce R. McFarling" <Bruce.McFarling@xxxxxxxxxxxxxxxx>]

I am a bit puzzled as to why a 20% devaluation of the US
dollar would have any substantial impact on the price of
Chinese imports, given that the Chinese currency is pegged
to the dollar.  It would seem to be a 20% devaluation on
both sides.

And it would seem that the other NAFTA partners would follow
the dollar down fairly closely.  Among the top US trade
partners, it would seem to be:

Canada, Mexico ... little change

Japan ... appreciation of the Yen would be in the face of
pressure to devalue the Yen if anything, so it is hard to
see the Yen being allowed to make much more headway against
the dollar than it has over the past year;

Germany, France ... maybe the Euro would be allowed to appreciate

China ... pegged to US dollar

United Kingdom ... maybe the GBP would be allowed to appreciate, if not as much as the Euro

South Korea, Taiwan, Singapore ... don't know, honestly

If it is a question mostly of the dollar depreciating against
the Euro, it seems to me that the capital flows would take
centre stage.