US Policies Are Actually ANTI-JOB!!

[Scataphagos]

Quote from Uncle_Ho:

I don't think a low dollar policy is necessarily that bad. It only hurts people that make dollars and have to spend euros or americans that travel to Europe.

The people who get hurt by low dollar high euro policy are countries like Germany or France. Who is going to buy german products or other european companies that make world products, no one will pay up for that when they can buy American cheap. Also it hurts them because people are not as likely to travel and spend money in those countries where everything costs 1.5x more. Just my opinion.

With the "short-sighted" view, you're right about how it works, but you're very WRONG as to whether it's "good or bad"... and that's the CRAPOLA politicos and exporters green us with.

But eventually, the weak currency policy migrates to all things denominated in that currency... "Destroy the currency, destroy the the people". Sure, the "country" rebounds... mostly it's foreigners whose assets didn't get debased who swoop in and pick up assets on the cheap. But the people whose assets were denominated during the currency destruction do NOT recover and get rich.

In my view, currency destruction is just behind GENOCIDE as to the evils a government can inflict upon its people..

 

[MohdSalleh]

dont confuse america with Obama

 

[sosueme]

Quote from Scataphagos:

Correctamundo! To attract capital and jobs to the USA, America needs "business and tax friendly" policies. Unfortunately, our policies are getting less "business friendly" all the time.... and our future looks grim...

Totally agree and so it makes the future a very interesting watch.

The more the White House wriggles it's way from one disaster to another without addressing the disasters directly, the less wriggle room it leaves itself for the next pending disaster.

The simple rule of cause and effect can never be beaten in the long run.

 

[Kassz007]

I think a low USD is good to a certain point. Obviously a total collapse would be terrible, but low USD will help get the USA get it's foot back in the door in the exporting game. Fluctuations in currency valuations are good and bad for different people depending on your situation. I don't think it's reasonable to give a blanket statement saying low USD is good or bad plain and simple.

 

[Ghost of Cutten]

Quote from makloda:

If the "Strong currency = best basis for jobs and economic growth" thesis was correct then soon Spain, Portugal, Italy Greece and Ireland will be economic powerhouses.

No - if the thesis were correct, then a situation where the Euro went up to a rate of $1 trillion dollars to 1 Euro would mean that the Eurozone would be far stronger and more prosperous than the USA. And vice versa if the Euro plummeted to a fraction of the dollar - the USA would have the far stronger economic situation.

It's basic common sense - if you can buy an entire country for peanuts, you are rich relative to that country; if you can't buy diddly squat from a country, you are poor in relation to that country.

Ireland, Spain, Portugal and Italy are noticeably more powerful economically now *relative to* the USA compared to the situation they were in back in 1999, let alone the 20th century when their currencies were basically toilet paper. If the Euro hit 2 or 3 to the dollar, they'd be better off still - tourists would be able to fly to Florida and NYC on the cheap, and buy the best designer crap for diddly squat, import US cars for bargain prices, Euro businesses would be able to scoop up US assets and workers on the cheap etc, whereas the USA equivalents would find it far harder to do the same.

 

[Ghost of Cutten]

Quote from Martinghoul:

Isn't #1 massively positive for exporters? Moreover, doesn't it also make investment into the USA more attractive (I think maybe makloda waas alluding to this)?

By logical extension, this means that if the dollar totally collapsed to worthlessness, this would be great for exporters. It would also make the USA a far better place to invest money into.

A quick survey of countries that have experienced total currency collapase shows that in fact the opposite is the case. Exporters do not perform far better in hyperinflation than under a stable or strong currency, and foreign investment is deterred, not encouraged, by hyperinflation, as can be shown by the collapsing real price of assets under such scenarios.

If you were right, wouldn't we be hearing about the great economic success story of 1950s-1970s Britain instead of Germany during the same era, of the thriving export and FDI-driven mega-boom of modern-day Zimbabwe or 1990s Yugoslavia instead of China or Ireland? Wouldn't Brazil have done far better from 2000-2003 instead of 2003-2007? Would Japan have become an exporting powerhouse if a strong currency was bad for the export sector? Would Switerland and especially its watch industry not have become a basket case many years ago with their persistent currency strength?

In general a strong currency is a symptom of economic strength, a weak one is a symptom of economic weakness. Think of it as the share price of a country or currency area.

 

[piezoe]

Quote from jueco2005:

All 3 can be summarized into one. Monetarization of the Federal Deficit.

Monetary expansion tends to
-lower interest rates
-the value of the currency declines
-we have to pay for the massive Federal debt with higher taxes.

Actually monetizing debt usually leads to high inflation, which is an indirect tax. It does not necessarily lead to higher direct taxes. Higher direct taxes can be used to avoid monetizing, but that is politically unpalatable. Either way though higher taxes result. Either indirect via inflation, or by direct taxation.

Most countries with a fiat currency when faced with high debt as a percent of GDP will attempt to monetize at least a portion of the debt. This is just a fancy way of saying they are going to inflate their debt away. It will be much easier for a country such as the US to get by with this than it was for a country such as Argentina. Ultimately it is a country's creditors that determine how much of the debt can be successfully monetized. Once the creditors say "no more" the country is in very serious trouble. In the case of Argentina, hyperinflation, very high unemployment, rioting and civil unrest resulted.

 

[piezoe]

Quote from Ghost of Cutten:

By logical extension, this means that if the dollar totally collapsed to worthlessness, this would be great for exporters. It would also make the USA a far better place to invest money into.

A quick survey of countries that have experienced total currency collapase shows that in fact the opposite is the case. Exporters do not perform far better in hyperinflation than under a stable or strong currency, and foreign investment is deterred, not encouraged, by hyperinflation, as can be shown by the collapsing real price of assets under such scenarios.

If you were right, wouldn't we be hearing about the great economic success story of 1950s-1970s Britain instead of Germany during the same era, of the thriving export and FDI-driven mega-boom of modern-day Zimbabwe or 1990s Yugoslavia instead of China or Ireland? Wouldn't Brazil have done far better from 2000-2003 instead of 2003-2007? Would Japan have become an exporting powerhouse if a strong currency was bad for the export sector? Would Switerland and especially its watch industry not have become a basket case many years ago with their persistent currency strength?

In general a strong currency is a symptom of economic strength, a weak one is a symptom of economic weakness. Think of it as the share price of a country or currency area.

Ghost of Cutten, while I agree in general with your remarks I think the distinction between a weaker currency and a collapsed currency needs to be made. Your remarks pertain to countries with collapsed currency and hyperinflation, do they not. I don't think Zimbabwe is an apt comparison with the US.

Also, after the financial collapse and hyperinflation subsided somewhat in Argentina it seems that there was in fact a great deal of foreign money rushing into the country to buy assets, as real estate, for one thing, got to be extremely cheap.