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Ok the economist is a rag. 1) Interest rates are endogenous. If we don't want them to go up, the fed can decide not to raise them. 2) A strong dollar improve
by bubbleRefuge 10y ago
Ok the economist is a rag.
1) Interest rates are endogenous. If we don't want them to go up, the fed can decide not to raise them.
2) A strong dollar improves our real terms of trade meaning we can actually have more stuff for the same unit. We get a higher real standard of living.
Who is checking the fact checkers?
- gumby 10y agoI don't understand this comment. The Economist was founded as a free trade advocate about 150 years ago and is hardly opposed to trade! The article clearly says the fed can raise interest rates or not as it wishes. The article doesn't disagree with your point 2 (I agree with it too) it just talks about domestic political issues related to this factor.
- st3v3r 10y agoWe don't get a higher standard of living. We're able to buy more stuff per unit, that's true. But, our trading partners buy less stuff per unit. This is very important given that we live in a global economy, and that's not going to change. So we're selling less stuff, meaning that companies make less money. Companies making less money produce less stuff or send jobs overseas to try and bring costs down. That means they're employing fewer US workers. This effect is compounded by the fact that our companies are competing against companies from other nations, whose goods are now cheaper to buy, making them more attractive than US goods.