Look Who's Worried About the Dollar
Citizen Bill Clinton just came back from Europe and he says, "It was expensive over there."
I asked the former president if he were he still in the White House, would he be concerned about the weakening dollar, and he said he certainly would. "At this level, it's alright, but if it keeps falling it could become precarious," he said.
Clinton was among the guests at a book party in New York's Four Seasons restaurant for former Fed chairman Alan Greenspan. Former treasury secretary Robert Rubin, now with Citigroup, and former Treasury Secretary Larry Summers were also there.
The dollar's tumble has been a nagging concern in the markets though there are those who think the benefits outweigh any of the potential pitfalls, like rising inflation. Remember, this week, the Fed's much-watched meeting minutes included a reference to the dollar and the risk of inflation. The dollar Thursday fell 0.3% against the euro to a rate of $1.4147. It is down 6.7% year-to-date.
President Clinton talked about how the dollar was helping exporters and manufacturers, how it will be good for the trade deficit. But too deep a slide can have a negative effect. He also talked about the need for fiscal restraint, reminding us: "I have always been a fiscal conservative."
Former Federal Reserve Chairman Paul Volcker was leaving as I arrived at this gathering of economic luminaries. I reminded him how I had met him many years ago when he was speaking to a Princeton University alumnae group one weekend. He was Fed chairman. I was a rookie reporter for Reuters. He made a comment on monetary policy, and I sent it flashing around the world.
I'm sure he didn't remember that moment, or me for that matter, but he was happy to share his thoughts about the dollar. I mentioned the fact that the dollar was noted in the Fed minutes. He nodded, though he could have been bending over to listen, as he is quite tall.
He said inflation could ultimately become an issue, when those cheap Chinese goods "start to go up in price."
I asked Greenspan the same thing. "I don't have to answer questions like that anymore," he said with a smile. Agreed. He's now a best selling author.
Here's a link to a blog on manufacturing you might find interesting: manufacturethis.org.
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