A couple of corrections to that last post Ziggy, as the author doesn't seem to understand what moves the dollar, although printing up a lot of them does have an impact.
First and foremost is Supply and Demand for Dollars. The US is the world's reserve currency and most international transactions are conducted in Dollars, even if you are buying in Saudi Arabia or Russia.
Countries get dollars by selling to the US, and while the trade deficit is starting to move in the right direction, we are still importing far more than we are exporting and that Gap is very large. The decline in the Dollar will help to reduce the trade deficit, by making it cheaper to produce here, and make things foreigners sell us more expensive.
It is in fact the US government, the current account deficit and the and the budget deficit (financing of the long-term debt) that are the cause of the Dollar's decline. You see, the US does not make enough money to pay off it's debt, or even make the monthly payments on it. The US borrows the money from foreign investors and American's who buy their debt instruments.
The US gets it's money from tax reciepts. What it needs each month, it tries to borrow in the open market, by selling newly issued bonds and bills and notes. The TIC report shows the relative demand from buyers and as long as it's positive, more money is coming in than the US needs, so the Dollar is seen as sound. But when that report is negative, and there isn't enough demand for Dollars... they have to lower the price so people will buy them, or raise the interest rate they pay. (The borrower demands a better deal in order to buy)
The Tic report has gone negative. The US cannot raise interest rates in spite of apparent inflation. This implies that things are going to get worse, until the US can control it's spending and actually reduce the deficit. I don't see this happening any time soon. The only bright light is the trade deficit is now declining, and it's got a long way to go before we can "earn" our way out of this mess.
