As confusion continues about the dollar, it has to be asked: WILL A WEAK DOLLAR CHANGE ANYTHING?
As a nation totally dependant on debt for its very survival, I have doubts.
For one, the US economy has been systematically de-industrialized over a period of 20 or 30 years. True, there are still a few industries left in areospace/defence, and some software makers. But for the most part the US simply DOES NOT MAKE THINGS.
So, just exactly how a weak dollar "makes US goods cheaper" is problematic.
Indeed, the only thing made cheaper by a weak dollar is our main export: TREASURY BONDS! And, other debt instruments.
I JUST DON'T SEE HOW A CHEAPER DOLLAR WILL MAKE THE AMERICAN CONSUMER "BUY AMERICAN." There simply isn't anything to buy. It's all mostly made in China these days.
Then there is THE DUBYA FACTOR. Everyone seems to agree that Dubya's Budget Plans of MORE PORK, MORE WAR, AND MORE EASY MONEY FROM MR GREENSPAN HAS BEEN A DISASTER.
Why was Dubya allowed to quite literally loot the US economy? Well, perhaps it was our "diminished expectations" of him in the first place. Or, maybe everyone was just watching TV and no one cared or noticed.
Still it happen......and now everyone knows it.
My hunch is that Dubya & Co. are in for a hard fiscal ride in the second term. I would expect NOTHING to be accomplished on anything, as the administration is tied down on "putting out fires" and just "keeping the rubber side down."
Meaning? Social Security reform is DOA. And read my lips: The Tax Cuts are going to have to be rolled back at some point, it's just economics kicking in, not politics.
Dubya's unilaterism and "illegal" wars have alienated the world, except for Micronesia and Poland. All of Araby and most of old Euroland are as anti-American as they can be, and not be classified as "rogue nations" or "terrorist states."
Having a president who is considered to be a "bad joke" in 90% of the world is not a reciept for a strong currency.
Finally, a weak dollar is a sure way to get higher oil prices.
And,.....that's the road to ruin no matter how much you spin doctor it.
With the rise of that wonderful new middle class in China, so beloved by our American Media, oil and gas demand should soar. More demand, Higher prices.
SO, ARE AMERICAN OFFICIALS "ENCOURAGING" A WEAK DOLLAR?
WILL IT HELP? I DON'T SEE IT.
PERHAPS, THEY ARE JUST PAINTED INTO A CORNER, AND THEY KNOW IT.
THE TRADE DEFICIT IS HUGE AND STRUCTURAL.....EXACTLY HOW A WEAKER DOLLAR HELPS, WITH CAUSING THE GREAT DEPRESSION REDUX IS UNEXPLAINED BY THE FED OR ANYONE ELSE.
Postscript: And if we are about to "take the cure" in the form of a Great Resession, or worse? Shouldn't we be thinking about setting up a social safety net for the victims of this adjustment?
