The Strong Dollar: We Told You So
Jude Wanniski
January 23, 1997

Memo To: David Wessell & Michael Sesit, WSJournal
From: Jude Wanniski
Re: Dollar's strength

Your report on page Cl today, "The Dollar Just Keeps Climbing," indicates widespread surprise among Wall Street economists, and reports the forecasters who didn't know what they were doing a month ago are now revising their forecasts to predict a stronger dollar ahead. You report: "If you want to see people with egg on their faces, take a look at currency forecasters: Only three weeks ago, they were either proclaiming that the dollar could never climb as high as it has or that the ascent would be a lot slower." No egg here at Polyconomics, thank you. On January 2, we sent our clients a forecast based on a set of likely political assumptions, which cast the dollar/yen rate at 130 before the end of 1997. This is 2 yen higher than the highest forecast among the 57 blue chip forecasters who were cited in the Journal that day [the highest at 128 being that of Edward Yardeni of Deutsche Morgan Grenfell], We also said, "With gold at $368, there is every reason to expect that Greenspan might be able to get it to $350 before the end of 1997," and now we see it below $350 before the end of January which begins to cause problems of its own. We actually called the break in the dollar gold price on November 20, when it first slipped below $380. We append our January 2 report, "Springboard Into 1997."