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Weak dollar boosting U.S. profits - Apr. 19, 2008 (broken link)
Interesting article I came across this morning.
What do you guys think? :O
Severe inflation wrecks every economy. Argentina, Zimbabwe, Yugoslavia, Germany, Hungary. The list is endless.
Japan was an exception because the Yen had real demand due to the productivity engine of the Japanese. We lost our manufacturing base long ago.
Some exporters will do well. Some resort areas do well. All poor countries have a tourist area whose citizens cannot afford to patronize. Soon Aspen, Park City, Broadway, Disneyworld, and other places like this will be almost entirely run on foreign money.
Some exporters will do well. Some resort areas do well. All poor countries have a tourist area whose citizens cannot afford to patronize. Soon Aspen, Park City, Broadway, Disneyworld, and other places like this will be almost entirely run on foreign money.
This is exactly right. A lower dollar is hurting the average citizen. You are seeing it in the grocery store and at the gas station. Soon you will see it in other places. The bad news is, if you do not like what is happening now, you really won't like what's comming. As the Federal Goverment continues to launch bail out programs and persue a ridiculously expensive war, the national debt will contiue to increase and the value of the dollar (and the value of your pay check) will decrease. As the purchasing power of foreign currency increases it makes our food and goods cheaper and they will be exported, which will mean you will have less here on your store shelves. Get use to higher prices and less choice. There is a growing number of citizens who are begining to realize this and actualy writing their representatives and telling them to stop the bail outs, and to balance the budget. We can no longer tolerate deficit spending. It is time for people to act, if they fail they will suffer much worse than whats happening now.
The conventional wisdom is that a weak currency encourages exports and reduces imports, thus benefitting the economy. That won't happen for us in the US this time because:
a) we have dismantled much of our manufacturing economy so we don't have those US products to sell overseas;
b) we must continue to import many manufactured items because we no longer manufacture them here; and
c) we have no choice but to import many resources at any price--oil, even some foodstuffs--because we no longer have those resources available in this country.
That means that what we buy abroad will continue to inflate in price in dollar terms and that our trade deficit in dollar terms will continue to grow. When those countries selling to us figure out that they are trading tangible goods and resources to us for a rapidly depreciating currency, they will do one or both of two things:
a) use their currency advantage to buy control of tangible productive assets in this country to exploit for THEIR benefit--things like real estate, natural resources and manufacturing (what we have left of them), and agricultural land; and
b) quit selling us stuff or demand that it be paid for in currency other than dollars.
When that happens the US will essentially revert to what it was in about 1750--it's called being a "colony."
Sure we will be exporting our raw materials and food. The weak dollar brings higher energy prices, higher food prices, more expensive goods, skyrocketing raw material prices, nothing good. Only those at the top who profit from selling us out benefit. Weak dollar is very, very bad. Inflation is the worst way to manage an economy. It's a tax that hurts the worker and benefits the speculator.
The weak dollar is the market doing its magic...it will increase exports (it already has) and help realign the global economy (reducing our trade deficit).
The claim that the US manufactures nothing is...simply wrong. Surely some manufacturing has left the US but that is the natural result of a global economy. The US still makes a large number of products it is still the 3rd export nation:
In the end foreign travel can not support the american tourist areas.If you look foreign tourist are going to the cities and taking buying vacations.Manufacturing has been going down for years and only the ones that have good models will survive.Alot of it waqs caused by the strong dollar verus the weker foreign currencies. Look at the chinese currecy;under valued for years.
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