Why do you think the US $ will continue to decline?

I agree that it will in the short term, but I am not to sure that the declines will continue to far into the future... As it stands, I'm almost 100% invested in the US stock markets...that is to say that I've scaled back my foreign positions because the recent returns have seemed "to good to be true" or at least to good to be sustainable (a little profit taking never hurts), and I've all but eliminated my investments in bonds because I think interest rates are at or very near a long-term bottom, so now I find myself with not much diversification other than that which comes from the different stocks themselves...

I don't expect the US trade deficit to go away because of our continued reliance on oil imports, but I do expect to US exports to increase substantially, and US companies to do very well as a result of the lower dollar which should drive earnings and stock prices higher for those US companies.

Despite the US$'s long term slide to new lows, inflation still seems to be in check in the US, which makes me think that the dollar's decline isn't so much a symptom of US inflationary troubles as it is a sign of possible European deflationary troubles. (The question then becomes: If Europe is in a deflationary spiral, will it suck the world economy into the spiral with it?)

Longer term, oil supplies and prices will continue to be the biggest unknown...but if the trend of a declining US$ were to slow, stop, and even begin to reverse, then you could see foreign investors begin to flood back into the US markets, which would drive the US markets much higher than they are currently.

The long and short of it is: I don't see any impending gloom or doom for the US economy; in fact, I think the declining dollar could have a positive effect and might just be long overdue.

Scott Evil