Dollar holds its own despite huge budget deficit

This year, like last, public policy makers once again warned of "impending disaster" for the U.S. dollar due to the record budget deficit. And once again, the reports of the dollar's demise were greatly exaggerated.

The deficit was supposed to produce a mass exit out of the dollar amid concerns that the U.S. Federal Reserve's quantitative easing policy would flood the market with dollars, reducing their value.