Hey, those of you that are Economists out there. What is going to

[against all enemies]

happen to this country if the dollar becomes so devalued that the Euro becomes the currency of the world? And how are the increasing deficits going to play into it? I have heard rumors that interest rates will skyrocket in the next year as all of this plays out. Any thoughts? Should everyone get out of variable rate loans? Information might help fellow DUers keep out of trouble.

[wicket]

1. Get out of variable rates ASAP!!!

I'm not an economist but that is the advice of my favorite economist, Paul Krugman.

[nadinbrzezinski]

2. hunker down

get out of debt,

learn to live more simple

Best case we wil only be hit

Worst case, Great Depresion.

But interest rates WILL HAVE TO GO UP

[TexasBushwhacker]

3. Variable rate loans are bad news - IMHO

However, people tend to get variable rate loans because they want a house that is more than they can afford on a fixed rate loan, and that's the real problem. Should a person convert to a fixed rate loan now if they can? Yeah, probably, but can they afford to?

[Selatius]

4. Bigger deficits can lead to higher interest rates on loans

That translates into people less willing to get a loan from the bank to invest in things such as their businesses, and that would mean a possible weakening of the economy as investment decreases and people cut back on spending.

A weaker dollar means that the US will be less able to import products from overseas. Foreign products will become more expensive. Just look at the store shelves of America, people. Most of the electronics and other sophisticated equipment you own is made overseas nowadays. It means that they will become that much more expensive relative to your income. Conversely, that could potentially mean US goods will become more favorable to buyers as the price of foreign goods rises relative to US goods.

It's the deficits that we should be worrying about. A weaker dollar means that we're gonna export a little more than what we already do, and we're going to import a little less than what we already do, but a high deficit can stop a recovery if it applies too much upward pressure on interest rates and forces it up too high, too fast. Regardless, any sharp jolt to either the value of the US dollar or the size of the deficit is going to hurt.

If the value of the dollar falls too quickly relative to the Euro and even to other currencies worldwide, it's going to send shockwaves through the economy as it struggles to find a new balance. If the deficit balloons too quickly, it's going to apply that much more upward pressure on interest rates.

[Sara Beverley]

5. Lot's of work for America's bargain goods and services.

Except I think the world will be boycotting us.