The US Dolar has been falling right and will continue to do so for a while right again as for propaganda well there's always a measure of that in most potitician's mouth and as for numbers there's also ways of manipulating them one way or the other .

I understand your skepticism or pessimism for the legacy left for the future as i share those views for the longer term , yet in this complex world where interests are sometimes converging or colliding nothing simple can explain where we're heading .

You may say your a simple man but i know for reading your posts that your mind can grab the complexity of this economy or the financial intricacies probably better then mine , yet if you don't mind my saying and i don't mean to offend you , i believe you have worked yourself in a more pessimistic view of the short to med term outlook ahead then the situation calls for .

I don't mean the situation is rosy or even evolving to a point where one can be outright optimistic about the future of the US economy and even though the US debt is staggering at the present time and not to diminish any time soon it seems to me thinghs have slightly improved over the last year on the account of measures taken . I think we all understand that something had to be done and worldwide action was taken to stimulate the world economy in similar fashion even though some were reluctant to do so among wich i recall the German for one . It was inevitable that debts would ensue from such actions and the worst case ( for major economies ) being the US and maybe a close second GB it's seems natural that their economies would suffer for some time to come in order to sustain that outstanding level of debts and with those debts one can only expect their currencies to bear the impact for quite some time .

But the US dollar enjoys a very priviliged status in world currencies and most countries have no choice but to support it in order to maintain the value of the portion of that debt they withold in bonds unless they accept to lose part of their investment , for sure they probably wish they could close their eyes and see the problem vanish before them but that won't happen , they have no choice but to prevent a sudden collapse of the US dollar while franticaly looking for alternatives .

I believe those alternatives are few and long to implement and even though bonds buyer won't be scrambling in at the door next year while the Fed won't have the luxury to by it's own bonds those supporting the US dollar for self interest will still have to show a measure of support to protect their investment while allowing the US dollar to dip even more but in a gradual manner . The Fed will have to raise interest rate if only to support those bond sales ang give some back to would be buyers .

While the stimulus package has still some ways to go it's evident foreigners supporting the Us dollar won't agree with more spending and have been long complaning about future deficit so they will look forward to see any measures that will point towards raining in the economy in order to cut spending and their answer to economic measures and the future US budget will come in treasury auctions probably early next year imo .

I believe the " exit strategy " will be applied timiedly at first and after raise in interest rates will have been measured to see what impact on the economy this will have , if the impact is negative i believe the Fed will maintain what little rise it has made for a while before lifting them some more . I also believe the demoneytisation program will be put in place very carefuly at first and in a small measure to monitor reactions . For sure this will be a slow and painfull process accompanied by raise in taxes and income taxes , this won't be fun for middle class people and poorer people , and even if higher brackets are hit hard they'll do better then most as usual obviously .

I believe the raise in interest rate will be the first step in applying any " exit strategy " and nothing dramatic could be done quickly in order to support whatever growth the econmy will enjoy when comes that time . But it's clear in my mind that a lot of pressure will come from foreign bond buyers to see the US is at least trying to protect their investment if it wants to enjoy their support in future treasury auctions . In 2009 bond's auction enjoy a year of "grace " from bond buyers but the future won't be as compliant unless the US is seen doing something about it's deficit .

Regards Tec!

PS i wish i could touch on the positive impact of a low dollar for US exports but time to go to work.