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Weak Dollar is Good for America and the World, save Europe

D

Dari

Lifer
It'll force us to stop spending and start saving due to lower foreign investments and higher interest rates. It should also force thrift economies, namely Asians, to start buying more American goods, lowering our trade deficits. Of course, this is in a pure market economy with no governmental interference. Albeit, unless their currencies are rigidly tied to the dollar (as in the Chinese yuan), there will be some effect.

The only people the falling dollar will adversly affect will be the Europeans, who like to play fair. They'll get a double blow as cheaper American and Asian products flood their markets. Their multinationals will also get less profit from abroad, worsening their economic growth.
 
When the health of their economy is at stake the European folks will go with their own country's production over cheaper imports. France over the years has shown this to be true and Ireland has or had little stickers on the goods that were made in Ireland so the population would support Irish labor. They know that they suffer in the long run if they let their own economy go down the tubes...

But... a weak dollar is not a dead dollar. What is the basis upon which one can place a value on the dollar versus another currency... Why does the dollar or the other currencies move at all? I guess my point is; does the dollar move or do the other currencies move? OR do they all seek some form of equilibrium based on some basic common denominator? What might that denominator be?
 
Originally posted by: dmcowen674
We don't make anything anymore so your hope of U.S. Products going the other way can't happen.
Click to expand...

You have no idea what you're talking about. You think our $10 trillion economy is made of reality shows and hot air?

Originally posted by: LunarRay
When the health of their economy is at stake the European folks will go with their own country's production over cheaper imports. France over the years has shown this to be true and Ireland has or had little stickers on the goods that were made in Ireland so the population would support Irish labor. They know that they suffer in the long run if they let their own economy go down the tubes...

But... a weak dollar is not a dead dollar. What is the basis upon which one can place a value on the dollar versus another currency... Why does the dollar or the other currencies move at all? I guess my point is; does the dollar move or do the other currencies move? OR do they all seek some form of equilibrium based on some basic common denominator? What might that denominator be?
Click to expand...

People go by their pocket books, not nationalism, especially in a globalized world. as for your questions about currency fluctuations, pick up a good macro/micro Economics book.
 
Originally posted by: Dari


You have no idea what you're talking about. You think our $10 trillion economy is made of reality shows and hot air?
Click to expand...

Question: It has been sugested that part of our $10 trillion of GDP is from importing cheap products, marking them up significiently, and then selling them for a profit (maybe doing something value added to them along the way) was added to the GDP (GrGr I think). If this is true, how much of our economy is actually ours and how much imported?

As far as exporting, how much do we export? Recent figures indicate around $100 Billion per month while importing $150 Billion per month (hence trade deficit).



 
Originally posted by: Engineer
Originally posted by: Dari


You have no idea what you're talking about. You think our $10 trillion economy is made of reality shows and hot air?
Click to expand...

Question: It has been sugested that part of our $10 trillion of GDP is from importing cheap products, marking them up significiently, and then selling them for a profit (maybe doing something value added to them along the way) was added to the GDP (GrGr I think). If this is true, how much of our economy is actually ours and how much imported?

As far as exporting, how much do we export? Recent figures indicate around $100 Billion per month while importing $150 Billion per month (hence trade deficit).
Click to expand...

I don't have data to give you an answer.
However, what you should really be asking yourself is how much is China's economy due to foreign investment? Remember that their economy didn't just blossom because the Chinese decided to invest in each other one day. No, it took huge amounts of Foreign Direct Investment. Hence, a lot of what the Chinese are reaping today is foreign owned.
 
Originally posted by: dmcowen674
We don't make anything anymore so your hope of U.S. Products going the other way can't happen.
Click to expand...

The company I work for would be very sad to hear you say that. I guess they went out of business while no one was watching. Not to mention the other 2 factories in the town I live in that are having to work people 12 hours a day 6 days a week in order to keep up with demand.
 
Actually, if the weak dollar prompts a shift to oil sales in euros, then it'll be bad for the US and good for everyone else.

And, praytell, what do we manufactor in America nowadays? Either it's small businesses making their own products, or extremely high-tech products, both of which weren't in danger of moving overseas. Other than that, I doubt you can find a stereo, computer, Tv etc etc that was made in the USA.
 
A weak US dollar is bad for Americans. You guys import more than you export.

For just about everyone else in the world, a weak US dollar is good.
 
Originally posted by: dahunan
How much of our debt is owned by foreign govts?
Click to expand...

AFAIK you owe most of your debt to yourselves. It's a messed up situation, and I still have trouble understanding how a nation can be in debt to itself. 😕

It's got something to do with printing out more and more money.
 
Originally posted by: SickBeast
A weak US dollar is bad for Americans. You guys import more than you export.

For just about everyone else in the world, a weak US dollar is good.
Click to expand...

Only good for the world if it doesn't collapse
 
Originally posted by: bdude
Originally posted by: SickBeast
A weak US dollar is bad for Americans. You guys import more than you export.

For just about everyone else in the world, a weak US dollar is good.
Click to expand...

Only good for the world if it doesn't collapse
Click to expand...

Well, you guys re-elected Bush and his neocon ways. You've gotta hope that 4 more years of his foolish economic platform doesn't destroy your nation's economy. Every business he ran failed miserably; the US economy has been no different.

It really irritates me to see the massive $1 trillion annual deficit that the US government continually racks up. The situation is completely out of control. I would be very worried if I were American. It concerns me as a Canadian, but doesn't affect me nearly as much.
 
If the "weak" dollar is a long term trend, it could mean more manufacturers producing their products in the US. I read that VW is plainning on producing Golfs here.

But I think that the Fed will raise interest rates to inhibit inflation. This will strengthen the dollar.
 
Originally posted by: Dari
It'll force us to stop spending and start saving due to lower foreign investments and higher interest rates. It should also force thrift economies, namely Asians, to start buying more American goods, lowering our trade deficits. Of course, this is in a pure market economy with no governmental interference. Albeit, unless their currencies are rigidly tied to the dollar (as in the Chinese yuan), there will be some effect.

The only people the falling dollar will adversly affect will be the Europeans, who like to play fair. They'll get a double blow as cheaper American and Asian products flood their markets. Their multinationals will also get less profit from abroad, worsening their economic growth.
Click to expand...


Ok, only one thing about the analysis - how long do u think Europe will accept to pay the price for the bettering of the US and the rest of the world. The reason the Euro is so strong is only because the Asian currencies are tied to the dollar and the asian currencies are the ones that should rise to record highs since it is mainly them financing the US deficits. But since the Euro is freely traded the financial markets use it to let off the steam. So the extreme rise of the EUro is not justified... I guess sooner or later the ECB has to change their policiy and actively do something against the rise of the EUro.


 
Originally posted by: dahunan
Can our workers survive the LOW WAGES that will come with this?
Click to expand...

as of yet, our inflation rates are still extremely low, and therefore the weak dollar is not hurting us at home at all. The only risk of a weak dollar is high inflation rates, and we still have some of the lowest inflation rates in the world. I think that if inflation stays down, a relatively weak dollar can be a good thing.
 

Japan threatens huge dollar sell-off

Heather Stewart in Tokyo
Sunday December 5, 2004
The Observer

Japan is warning the White House that there will be 'enormous capital flight' from the dollar if the Bush administration maintains its laissez-faire approach to the mounting currency crisis.

Tokyo fears that Japan's strongest economic recovery in a decade could be derailed by the sudden appreciation in the yen against the greenback.

The criticism of President Bush's inaction, by a senior member of the ruling Liberal Democratic Party, will be taken as a veiled threat that Japan could start to sell off its multi-billion-dollar holdings of US Treasuries. 'The Japanese government is going to ask for a strong dollar policy; if it continues to fall, there would be enormous capital flight from the dollar,' said Kaoru Yosano, chairman of the LDP's policy council, adding that Japan would be calling on its fellow G7 governments to demand the US deal with the massive fiscal deficit that has helped to prompt the dollar's decline.

Yosano's remarks echoed a warning from a senior Japanese Ministry of Finance official that if the US does not push up interest rates to make the dollar more attractive, 'the one-way sentiment on the dollar will have a negative impact on the flow of capital into the US.' He added that Japan is urging its European counterparts to join a campaign of coordinated currency-market intervention, saying: 'If the dollar is depreciating, we should have coordinated action: that has already been communicated to my European counterparts.'

Like Japan, the eurozone fears that its tentative recovery could be choked off by the fall in the dollar, which European Central Bank president Jean-Claude Trichet has called 'brutal'. However, the ECB has so far dismissed the idea of intervening.

Japan is taking a double hit from the decline in the dollar because the Chinese renminbi is pegged to the US currency, so Japanese exports are simultaneously becoming sharply dearer in both their major markets. Takeo Fukui, the chairman of Honda, admits, for example, that an appreciation of 1 yen against the dollar, if it lasts for more than three months, knocks 10 billion yen off the carmaker's profits.

------------------------

There's a very real possibility that the retreat of the dollar turns into a rout. A weak dollar leads to more US exports in volume but not necessarily in value. A super weak dollar is no good to US exporters either as US companies earn their profits in dollars. Also as foreign markets are hit by stagnation or worse, they will not be in financially good shape to take up huge volumes of US imports.

A question. Since Japan, Europe, the OPEC nations etc. sit on vast mounds of US treasuries soon to depreciate, why do they simply not use those huge amounts of dollars to buy US companies?
 
Originally posted by: SickBeast
A weak US dollar is bad for Americans. You guys import more than you export.

For just about everyone else in the world, a weak US dollar is good.
Click to expand...

Wrong. A weak US dollar hurts countries that try to sell the US goods, like, oh, um, Canada. So far, our manufacturing sector has weathered the challenge, but go talk to someone in the film industry in Toronto. Ask them if the high Canadian dollar has been good. They started losing jobs back when the dollar hit 75c.

AFAIK you owe most of your debt to yourselves. It's a messed up situation, and I still have trouble understanding how a nation can be in debt to itself.
Click to expand...

First of all, Asian countries but a ton of American debt, especially China. It's one way they keep their currencies pegged to the greenback. Also, a country's gov't can owe money to itself by selling bonds and other finacial assets to its people and companies.

Where the hell did you pull these little pearls of knowledge, Sick, apart from your ass?
 
Originally posted by: Pacemaker
Originally posted by: dmcowen674
We don't make anything anymore so your hope of U.S. Products going the other way can't happen.
Click to expand...

The company I work for would be very sad to hear you say that. I guess they went out of business while no one was watching. Not to mention the other 2 factories in the town I live in that are having to work people 12 hours a day 6 days a week in order to keep up with demand.
Click to expand...

3 Factories in one Town??? :shocked:

Where have you been, that is clearly the exception rather than the rule.

Where are you??? What State, what town???
 
Originally posted by: Engineer
Originally posted by: Dari


You have no idea what you're talking about. You think our $10 trillion economy is made of reality shows and hot air?
Click to expand...

Question: It has been sugested that part of our $10 trillion of GDP is from importing cheap products, marking them up significiently, and then selling them for a profit (maybe doing something value added to them along the way) was added to the GDP (GrGr I think). If this is true, how much of our economy is actually ours and how much imported?

As far as exporting, how much do we export? Recent figures indicate around $100 Billion per month while importing $150 Billion per month (hence trade deficit).
Click to expand...

"The $1.439 trillion of imports to the US in 2002 were directly
responsible for some $3.35 trillion of US GDP, almost 32 percent of its
$10.45 trillion economy. That is why US policy-makers have no incentive
to reduce the trade deficit." (Henry CK Liu)

If the above figures are correct imports make up about one third of US GDP.

The weaker dollar will force US consumers to pay for their own private and public debts causing interest rates to rise and investment to fall. As the economies of foreign export dependent nations cool off their demand for US exports will diminish. The US could be left with high priced imports (fewer imports at the same value), low priced exports (more exports without increase in value), high interest rates, accelerating inflation, depressed equity markets and substandard growth (contraction of GDP).

This scenario does not exactly promote the pipe dream of a return of the industrialized mid west as Supertool's link wishes for.

Japan has been saying for some time now that it is about to stop lending money to the US. As Japan goes so goes the rest of Asia. And since the ECB at this point in time does not want to support the dollar the dollar is set for a further dramatic drop (read crash). Both the Asian central banks and the ECB seem to be waiting for the US administration to make a move showing that they are as serious about their support for the "strong dollar" policy they claim they are.




 
A weakening dollar is just what we need, but it musn't go too far. If our dollar drops, outsourcing jobs to other countries, like India (but not china) may decrease. For example before it was 6 indians to the American workers wages. After a weakening dollar it might only be 4 indians to the American worker. Americans are still paid the same, their mortgage is still the same, but there is less incentive to offshore.

We don't need inexpensive goods, what we need is jobs. Is life that much better with 4 TVs as opposed to 1 or 2? But life is much better with a job.
 
Dari,
People go by their pocket books, not nationalism, especially in a globalized world. as for your questions about currency fluctuations, pick up a good macro/micro Economics book.
Click to expand...

So the Irish Government waste their tax payer's money printing all them 'Buy Irish' stickies. To the Irish of the last 30 years keeping Ireland's economy moving requires jobs and buying imports is not an option unless it has no Irish made alternative. I suspect the French and a few others think this way as well.. least ways it is what I've observed.
I'll pick up that book.. have one or two about here somewhere but they are so old and what with economics changing to accommodate the changes in Social Order I'd have to go buy a new one and it would most likely be printed and assembled in China and I don't want to increase their Social Order any further.

 
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