THE BATTLE NOW IS TO HAVE THE DOLLAR DECLINE IN A MORE ORDERLY MANNER...THE DECLINE OF THE LAST TWO WEEKS HAS BEEN TERRIFYINGLY DISORDERLY, AND COULD LEAD TO MARKET PANIC

Global government officials now have the job of jawboning the dollar higher, or at least slow down its decline. The U.S. Secretary of the Treasury has for the first time said something to defend the dollar, and the head of the European Central Bank has denounced the decline in the dollar as "brutal".

We expect more and more supporting statements and threats of intervention to let others know that the dollar will not fall precipitously. It may rally for a time as these pronouncements are made.

The U.S. wants the dollar to decline, but they want it to happen in an orderly manner. The effect of a lower dollar is to increase U.S. exports, but it also diminishes the U.S. public's standard of living and the value of their savings and investments on a global basis. All of this happens without the public knowing it right away.

We do not think these statements of support for the dollar change anything, but may cause some short sellers of dollars to cover their positions, and may discourage others from abandoning the dollar as soon as they otherwise might.

Until problems such as the triple deficits and irresponsible government spending are corrected, the dollar will not be strong for a prolonged period.

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