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> Dollar devaluation: It's actually a good thing for the US economy and the US consumer I agree with everything but this claim about the falling dollar as a be

> Dollar devaluation: It's actually a good thing for the US economy and the US consumer I agree with everything but this claim about the falling dollar as a benefit. The falling dollar is a way to default on international debts. It is also outright theft from those who have saved in dollars. This idea that a falling currency means boosted exports is empirically challenged. If you measure in terms of the devalued currency, then yes, more money is received. But it's money that is worth less, so the change is essentially meaningless. In terms of actual physical exports, with a couple exceptions, falling currencies have not boosted manufactured exports in industrial economies. The more obvious historical correlation is a trade surplus and a strong currency. A falling dollar will probably boost the share of existing commodity production that is exported more than it will stimulate new manufacturing. That is a bad thing in that it basically means Americans are finding themselves outbid on their own crops. It means people eating less meat because they can't afford it anymore.

iamelgringo 19y ago
* The falling dollar is a way to default on international debts. * Isn't that what third world countries have been doing for decades? :) I hadn't really thought of the increase in export volumes would essentially be zero sum because of the fall in value. Good point. I don't know. I've been of the impression that the US dollar has been overvalued for quite some time, however. You can't keep running the trade deficit's that we've been running for decades, and expect the dollar to stay strong. Essentially, what I think is happening, is that the whole world has been running up the prices on the Dollar for decades by using the Dollar as a benchmark and holding currency. And, now the market is correcting itself, and buying the Euro instead. The Dollar has never really had a decent competitor until the advent of the Euro. While I certainly don't think that it's going to be good for us in the short term, I do think that it's going to knock some financial sense into us. We've been living on credit cards for far too long as a country, and now we're going to have to pay off the credit card bills. I'm okay with that.

iamelgringo 19y ago

* The falling dollar is a way to default on international debts. * Isn't that what third world countries have been doing for decades? :) I hadn't really thought of the increase in export volumes would essentially be zero sum because of the fall in value. Good point. I don't know. I've been of the impression that the US dollar has been overvalued for quite some time, however. You can't keep running the trade deficit's that we've been running for decades, and expect the dollar to stay strong. Essentially, what I think is happening, is that the whole world has been running up the prices on the Dollar for decades by using the Dollar as a benchmark and holding currency. And, now the market is correcting itself, and buying the Euro instead. The Dollar has never really had a decent competitor until the advent of the Euro. While I certainly don't think that it's going to be good for us in the short term, I do think that it's going to knock some financial sense into us. We've been living on credit cards for far too long as a country, and now we're going to have to pay off the credit card bills. I'm okay with that.