Is the dollar toast?
In Gary Shteyngart's brilliant new novel "Super Sad Love Story," he envisions a not-so distant nightmarish future for the United States where the dollar has essentially no value and China gets tired of backing our worthless debt. Fortunately, it's just a satire. Or is it? The dollar has sunk like a stone in recent weeks. With the euro now at $1.41, nobody's seriously talking about parity any more. There are growing concerns about the trade deficit in the United States and the possibility of trade and currency wars -- particularly with China. And with the Federal Reserve strongly hinting that a new round of bond buying -- the so-called quantitative easing policy -- is likely to be announced at its next meeting in early November, long-term bond yields could continue to sink. That may put pressure on the dollar and make our nation's biggest creditors, i.e. China and Japan, increasingly wary of holding debt that offers such little in the way of return.