Last night I attended a debate between Haas Acting Dean Richard Lyons and Professor Andrew Rose. Even though their roles were reversed from those defined in the program (Lyons felt the dollar had already depreciated and was stabilizing, with Rose taking the position that there was likely going to be further declines in the dollar) it was an interesting and entertaining debate. It was about as close as economics comes to improvisational theatre.
Without going into all the underlying economics (which I am fully unqualified to interpret) the general sentiment was that appreciation in the dollar is pretty much out of the question (at least for the next few years), and it is really just a question of whether the dollar is going to fall further or if we have hit the bottom. Professor Rose even postulated some scenarios in which the dollar could fall as low as 2:1 in relation to the Euro.
The conversation focused around the somewhat usual suspects of the current accounts deficit, a low US savings rate, high US government spending, insufficient tax revenues, and the potential shift from the dollar as the world's reserve currency of choice. All of that said, I was left thinking more about socio-political questions than economics. Where is all our money going? Are we investing in a better future or are we just frivolously overspending? What would be the optimal allocation of global resources? I don't really have a philosophical problem being in debt for good reasons...but are we?
Also, does anyone know a good fx broker??? ;-)