NEW YORK (CNN/Money) - If anybody in the world still wondered about the Bush administration's attitude about the dollar's recent decline, Treasury Secretary John Snow's comments this weekend set them straight: Bush likes the drop and wouldn't mind seeing more of the same.

The big mysteries, then, are just how much further the dollar might fall and what that means for the world's largest economy. While U.S. policy-makers certainly hope the decline won't become a full-fledged rout -- rather they want the weaker dollar to boost the U.S. economy and fight deflation -- the jury's still out on both counts.

Neverthless, many investors weren't happy about the dollar's latest drop, and took the chance to pull some money out of stocks after the market's recent rally. (For more on Monday's stock market drubbing,click here).

When thinking about how low the dollar can fall, it's important to note that the dollar's performance hasn't been uniformly bad against all currencies. It looks particularly ugly against the euro, having tumbled about 21 percent against Europe's currency in the past year.

But the dollar is faring much better against Asian currencies. It's down only 9.5 percent against the Japanese yen, and has been flat against the Chinese yuan and the Hong Kong dollar, since both currencies are pegged to the greenback.

The Federal Reserve's dollar index, which measures the buck against just six other currencies, shows a 17.6 percent drop for the dollar in the past year. The Atlanta Fed's index, which measures the dollar against 15 currencies, shows a 6.6 percent drop over that time.

As measured by the Atlanta Fed index, at least, the dollar is still bloated from the huge gains it enjoyed in the late 1990s, when overseas investors poured their money into U.S. assets trying to buy into the late 1990s, dot.com-fueled boom.

Between July 1995 and February 2002, the dollar jumped a whopping 35.8 percent, as measured by the Atlanta Fed, so the recent 6.6 percent pull-back has just barely begun to chip away at the dollar's strength.

"The trade-weighted value of the dollar really has not depreciated that much -- there's still room to go down," said Sung Won Sohn, chief economist at Wells Fargo & Co.

It seems unlikely that there would ever be a dramatic plunge in the dollar's value. Europe won't sit idly by and watch its currency appreciate forever, which would crush the profits of European companies by making European exports more expensive in other countries, and Japanese policy-makers have already promised to do everything in their power to keep the yen from getting too muscular.

CNNfn's Allan Chernoff takes a look at comments by Treasury Secretary John Snow and what a weaker dollar means for businesses and consumers. Play video (QuickTime, Real or Windows Media)

What's more, the U.S. economy is still the world's biggest, and its markets are still the most open, which should continue to draw foreign investors.

But several factors have conspired in recent months to knock the dollar from its perch, including the Bush administration's apparent efforts to talk the dollar down, corporate accounting scandals and the risk of terror attacks against U.S. targets.

"Currency markets go in trends, and this is definitely a trend," said Ashraf Laidi, chief currency analyst at MG Financial Group in New York, who thinks the dollar as measured by the Atlanta Fed index could fall another 5 percent this year. "We are in the nascent stages of a long-term decline in the dollar."

For its part, the Bush administration said Monday there has been no change in its dollar policy.

But so what?

Most policy-makers believe a weak dollar is good for U.S. exporters -- they can sell their goods more easily overseas, boosting their profitability.

What's more, a weaker dollar is, by definition, inflationary -- the Federal Reserve's worries about deflation, an unstoppable drop in prices that hurts corporate profits and can do serious damage to the broader economy, could be eased by a sinking dollar.

"The dollar's continued decline has complemented the drop in interest rates as a stabilizing force in the [economic] outlook," Salomon Smith Barney chief economist Robert DiClemente said in a recent research note.

But other economists note that China, the world's biggest exporter of cheaply made goods, only gets stronger when the dollar falls, since its currency is falling, too, meaning U.S. manufacturers aren't gaining that much of an advantage versus their Chinese counterparts.

And if the dollar is falling, then overseas investors will have less appetite for dollar-denominated U.S. assets -- which could account for the declines in U.S. stock and bond prices on Monday.

"When you're the world's banker, you really need to maintain the world's confidence in you and your currency," said Northern Trust senior economist Paul Kasriel. "If you start telling creditors you're going to pay them back in currency that doesn't buy as much, they won't want to bank with you any more."

In order to entice investors by giving them bigger rewards for their loans to the United States, interest rates will have to rise, which could spell the end of the super-low rates that have boosted the U.S. housing market and consumer spending in recent years. Consumer spending, which fuels more than two-thirds of the total economy, and housing have been key to the economy with business spending weak for the past few years.

And if dollar selling begets more dollar selling, it'll be look out below for U.S. assets and the economy.

"I think it's bad karma when you start talking down your own currency; it smacks of desperation," Greg Valliere, political economist with Schwab Washington Research, told CNNfn. "If this turns into a rout, that will prove that classic adage -- be careful what you wish for."