Holy smokes. I just read 9 pages of this thread for the first time (ok, I'm too wound up to sleep), and I cannot believe not one person has explained this. It's the basis for our foreign policy for christs sake, and it is 100% accurate. Let me see if I can explain this more simplistically.
A strong dollar means that other currency is cheaper yes?
So, say $1 is equal to 7.50 yuan (chinese dollars) right now, that means that you can go to china and buy $7.50 of their products.
If the dollar gets 'stronger', then $1 becomes say, 8 yuan. Now... that means I can go to china, and buy $7.50 worth of products, and then $.50 more worth of the same product. The products there got CHEAPER right?
What does this mean?
When we import 750 billion dollars worth of say shoes from China, when the dollar gets stronger, we get 800 billion dollars worth of shoes. Isn't that great? Prices got cheaper! Now, Walmart can sell those shoes for even less money!
What does that do to OUR shoe factories? Maybe China can produce shoes for $1. WE are producing shoes for $1.10. Great, some stores can carry our shoes, people may pay a bit more to buy American. But what if the shoes dropped to $.90? What if they dropped to $.80? Would anyone be willing to pay $1.10 for the SAME SHOES? The cheaper the money gets, the more crippled our industries get. The more US jobs are lost. The more factories get shuttered.
A few years ago, the very last Levi Strauss factory shut down. This is EXACTLY what happened to them. 100 years of American history gone. Levis are all made in China now. Funny, that little Wild West gold miner emblem today.
THIS is the price of a strong dollar. More and more companies in the US cannot compete. As they go the way of the dodo, all the companies that fought to sell American products must switch to Chinese products. They no longer have a US supplier. So all that money becomes still more imports. We're hooked on the crack of cheap prices, our industries cannot compete, and as they go out of business, we must buy more from our dealer, China, to fill the hole.
This weakens the economy as we go from being a producer nation to a completely dependent debtor nation, and if it goes far enough, into slavery, as we can no longer produce anything, yet we must have our supply.
For the last... I dunno, 12 years? Our government have been fighting for the Chinese to devalue their money, stop tying it to the dollar, to give our industries a fighting chance. Grant you this doesn't help the consumer, who will happily distroy their potential future income by buying cheaper today. But our economy needs them to stop giving us such a great deal.
I give you the best comparison most of you can appreciate. Walmart. What did Walmart do to small local businesses every time they opened a store in the last 10 years? Distroyed them.
How? By being cheaper due to their volume pricing (and buying from China cheaper).
Then what? Then they had no competition.
Once they distroyed them what happened? EVERYONE who once bought at those small town stores now had to buy from Walmart, including the former owners and employees of those stores. They no longer had competition. Walmart made more and more money.
Was that bad? Not for them, but you realize that by people buying from Walmart, they were giving the Chinese more money too.... which closed our factories, which distroyed one small US business after another, and lost jobs.
Our unemployment figures are low right now. They don't take into account the number of people who gave up looking for work, who took far lower paying jobs (union factory workers who once made $40/hour and could support their families took jobs at Walmart for $8/hour because there were no other jobs in their town?).
Some started new businesses, some started trading full time from home, some found new jobs. Americans are very creative and resilient. It's not all doom and gloom... yet. But there's a reason that any economist who understands the real world will tell you that a strong dollar is NOT always a good thing AT ALL.
So while I was forced to take 6 semesters of Economics in school (Georgetown School of Foreign Service), I don't remember much of it. I don't know what book you're talking about or even who that guy is. But that sentence makes more sense than almost any other economics explanation and actually summarizes current world economics very very succinctly and accurately.
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