In the six years since the advent of the euro, short-term exchange rate volatility against the U.S. dollar is unchanged from that of predecessor currencies. The wide down/up swing of the euro/dollar exchange over six years is no greater than that seen in earlier periods, especially 1980–1987....

The U.S. current account deficit is unsustainable and will need to fall by half as a share of GDP in coming years. The adjustment process will necessarily involve (1) substantial further real effective depreciation of the U.S. dollar, (2) slowing of U.S. demand growth below potential output...