USD can only depreciate against planet Mars

I attended a talk by Larry Summers in Mumbai. The topic was “India and the Global Economy”. I could not have missed this event.  

But was disappointed. Barring a few insights nothing much was talked about. The topic also changed to Indo-US foreign relations. I am very interested in this area but there were not many takeaways. And coming back I realised, Summers had given a similar talk in July-10 – The U.S.-India Economic Relationship in the 21st Century. So read this speech and you have not missed anything.

The key takeaway of the meeting was the title of the post. Uday Kotak of Kotak Mahindra Bank recalled a meeting with Summers in 2008. US economy was dipping and things looked tough. So when asked whether USD would depreciate, this is what Summers said: USD can only depreciate against planet Mars… 🙂

The idea being with so many economies in trouble, USD will never really depreciate. Even when US alone  is in trouble, the recession spreads through other economies.   So on earth it cannot depreciate against any economy. Might be against otehr planet… hence Planet Mars…