qcomer, the dollar falling only affects the exchange rate, I think. It will increase our exports and make imports more expensive, but it shouldn’t change housing prices, unless interest rates are dramatically affected by the Fed changing them to keep FCBs buying Treasuries again. So I don’t see how a falling dollar affects housing.

I think we can have higher rates and a weaker dollar. As soon as the Fed stops raising, FCBs could stop buying Treasuries. They will instead buy assets in countries with stronger economies (less debt, more exports). We could have 7% Fed funds rate and a falling dollar. It’s certainly possible. The other countries are getting nervous about having so many US$, and want to diversify. This can cause them to sell dollars, and that makes the dollar weaker.

I think the Fed will keep raising rates as long as commodity prices are rising and feeding through to producer and consumer prices. They have to avoid letting inflation take hold. I am surprised that inflation signs are still showing up. Do you think they will stop in August?