Originally posted by: OS
Originally posted by: Engineer
Oh, and the falling US dollar should attract purchases of US goods and servies since they will be much cheaper because of the exchange rate. On the flip side, imports "could" skyrocket, especially oil (trading at an all time high of $82+ in after hours trading today) which is sold and based on US dollars.
we import more than we export so this is immediately not good for us.
Exactly. It would be great if we actually had any significant manufacturing capacity still remaining. However, even with a significantly lower dollar, those industries that do remain, are still competing against China, who's currency, while not directly pegged to the dollar, is still largely influenced by the dollar. Thus, not only do they produce cheaper goods because their manufacturing costs, but their goods also decline in close proximity to ours due to currency pegging.
Their currency *should* increase relative to ours, increasing costs of their goods. However, it doesn't. This is a key thing that many people forget.
As far as goods from other countries and China somewhat, there will be significant inflationary pressures now, since their goods will be more expensive and we still import more than we export.
This, as a whole, is a horrible move for the US. If you want to look at what inflating yourself out of a recession and significant debt does to a country, look at the Wiemar Republic.
Their primary way of getting out of paying reparations to WW1 countries was to print money like mad. This introduced massive inflation, leading to, in some areas, even worse times than the Great Depression in the US. Bread had to be adjusted in price multiple times per day to account for the inflation.
This was nothing more than pandering to Wall St..
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