Lateefah Simon: “Yesterday's Washington Post, in an article by John Berry, "Dollar Keeps Falling Against Yen and Mark," quotes a…”

“Yesterday's Washington Post, in an article by John Berry, "Dollar Keeps Falling Against Yen and Mark," quotes a Washington economist, L. Douglas Lee: "The way to address the problem is to do something to bring savings and investment closer together--such as reduce the federal [budget] deficit," Lee said. And that pointed to yet another reason for the dollar's weakness--last week's Senate defeat of a constitutional amendment to require a balanced budget, which "was read as a negative by the currency market," Lee said. The basic problem for the dollar is that there are just too many of them sloshing around, says George Magnus, chief economist at S.G. Warburg & Co. in London. The U.S. current account deficit--a broad measure of trade in goods and services plus certain financial transfers--is huge and growing. In addition, "there is still an underlying outflow of investment capital" as U.S. companies continue to invest in plants and equipment overseas, he says. Here I might add what encourages that outflow is when you do not have a decline in interest here and when it is more productive, when you get more for your capital, to invest in other countries. The balanced budget amendment, every projection said, would send interest rates in this country down.”