Subject: Re: FKA: DG
This is only a problem if you are selling AND
1) You want to make a purchase in a different currency
or
2) It starts to impact inflation on imported goods
For most people, the currency fluctuations are just noise; and likely in the "too hard" bucket to properly mitigate.

Well, #1 is certainly true for asset prices, as are all price movements: only the prices the day you buy and the day you sell matter. But remember that salaries are affected, which doesn't involve selling assets. The US minimum wage just fell, for example.

A whole lot of #2 is pretty much inevitable, just slowly. Assuming the dollar fall is lasting, a big question.

Mainly the effect is "it really is a real loss of wealth, just not very obvious to folks living surrounded by the dollar world". Everybody with a fixed USD salary just took a true pay cut, but it isn't visible because their barbers and dentists did too. But both of them will be buying stuff from other countries, or buying services from people who had to buy inputs from elsewhere, so most of it will show up as inflation that slowly spreads through the economy.

It probably won't be one-for-one, as some of the pay cuts and value drops may simply stick around, notably real estate. An apartment in NYC is a lot cheaper than it was a few months ago in terms of the general purchasing power that it would take to buy it. For a US business which has as one of its indirect inputs the cost of US land, their cost of production basis may not rise as much as the dollar falls. Conversely for a retailer selling goods which are overwhelmingly imported, the inflationary effect will show up very quickly.

Offhand I rather expect a temporary bounce in the US dollar, maybe in the next few months, before setting into some longer term weakening trend. With about 51/49 confidence : )

Jim