Kenneth Rogoff Asks What Keeps the Dollar so Strong
The dollar should be much weaker relative to America’s competitive position, according to Kenneth Rogoff of Harvard University. In 2006, interest payments for US debt amounted to 6.5% of GNP. US borrowing makes up more than two-thirds of combined excess savings of all surplus countries in the world. The former IMF chief economist reports that domestic consumption, Americans’ confidence in their economic situation, and low unemployment have kept the dollar strong. As long as the status quo persists, the dollar will remain stable, but scenarios that might weaken the dollar – a nuclear terrorist attack or an escalation in the Middle East – are not unthinkable.
