Brad DeLong wrote a nice (but long) summary of the dollar debate in his blog . Briefly, it is likely there is a 30% decrease of dollar value within next 5 to 10 years, but no one knows what will happen then. Domestic economics oriented people argued that there was no worry in this issue. The US is big, and the low value of dollar will stimulate the US production. On the other hand, the internation focused economists pessimistically predicted that the US would enter a deep recession due to the collapse of its economics.

Sure they both have some models for their arguements. BUT, all models are wrong, while some are useful. As I have claimed before, economic models are useless. If there is a potential danger in the falling dollar, why don’t they do something to fix it? A strong dollar has proved to be useful for the US economics, for example, the 1990s economics boom. If the dollar is falling down, everybody will leave you since they have alternatives such as the growing independent and strong European Union.

Mankiw sucks.