What Does a Weak Dollar Mean?

We need to keep a sharp eye on inflationary pressures even though the economy might be slowing down. The reason is that foreign goods will become more expensive for us and we all know how much we are addicted to Walmart and those Chinese Lead Laced Toys (I should say former "lead-laced")

Inflation is the number one enemy to bonds investors since rising prices chip away at fixed-rate returns. When choosing stocks, it might be wise (talk to your financial advisor) to favor companies that derive some of their revenues internationally (assuming their businesses are not hurt by the weakened dollar). If Europe is offering higher interest rates in some of the financial vehicles and the US is still at the bare bottom, talk to your financial advisor about putting some of your cash there.

A weak dollar could lead to inflation. Inflation can then lead to higher interest rates in an effort to control business activity, however there is a balance that needs to be maintained between stimulating growth and controlling it. How much does the Fed need to cut rates to stimulate growth without sending inflation through the roof? Perhaps another full point, since the last full point didn't do much. As a 4-time entrepreneur, I know I want to be able to get my hands on "cheap money" when I am expanding my business or starting something new and so far I haven't been very motivated to make a big expansion leap.

The upside to the dollar's downslide is that are the US trade deficit is the lowest it has been in years. However, the high price of oil is dampening the overall rise or exports. China has purposely devaluated the yen in order to spur more of their exports. It seems to have worked for them hasn't it? Can you find anything not made in China? Now as more Chinese are looking to obtain the American lifestyle, it will be interesting to see how they manipulate their monetary policy.