Mark Carney -- Governor of Bank of England -- World needs new reserve currency.

[moneill]

Originally Posted by ellis bell

currency fluctuations: How they affect the economy

"a common fallacy that most people harbor is that a strong domestic currency is a good thing because it makes it cheaper to travel to europe, for example, or to pay for an imported product. Realistically, an unduly strong currency can exert a significant drag on the underlying economy over the long term as entire industries are rendered noncompetitive and thousands of jobs are lost. While consumers may disdain a weaker domestic currency, a weak currency can result in more economic benefits."

yup!!!!!

[cttransplant85]

Originally Posted by Ellis Bell

Currency Fluctuations: How they Affect the Economy

"A common fallacy that most people harbor is that a strong domestic currency is a good thing because it makes it cheaper to travel to Europe, for example, or to pay for an imported product. Realistically, an unduly strong currency can exert a significant drag on the underlying economy over the long term as entire industries are rendered noncompetitive and thousands of jobs are lost. While consumers may disdain a weaker domestic currency, a weak currency can result in more economic benefits."

Its better to have a strong currency than not. It may hurt the economy in some ways like trade and tourism but overall it helps American citizens, consumers, savers it’s why we have the strong dollar policy. You ideally want a strong currency as it raises living standards. If your policy is to weaken your currency you can have a run on your currency and a total loss of confidence. Nobody wants to hold the yuan for example so the Chinese government is forced to make crazy moves like buying up all the yuan on the market to prop it up. Inflation is a transfer of wealth from people who hold money to people who hold assets. It hurts the poor the most.

[moneill]

Originally Posted by cttransplant85

Its better to have a strong currency than not. It may hurt the economy in some ways like trade and tourism but overall it helps American citizens, consumers, savers it’s why we have the strong dollar policy. You ideally want a strong currency as it raises living standards. If your policy is to weaken your currency you can have a run on your currency and a total loss of confidence. Nobody wants to hold the yuan for example so the Chinese government is forced to make crazy moves like buying up all the yuan on the market to prop it up. Inflation is a transfer of wealth from people who hold money to people who hold assets. It hurts the poor the most.

But between a strong currency and a weak one - -there are multiple levels of currency that can work.


And your comment that a strong dollar in some ways impacts trade & tourism but is good for American residents....isn't completely accurate.

When a dollar is too strong, it impacts the cost of USA exports.....it will add to the trade deficit that Trump is so concerned about. It encourages USA companies to move manufacturing overseas.

A weaker dollar makes USA made goods cheaper and more competitive on the international market. It makes it more expensive for Americans to travel and promotes tourism in the USA.

The biggest complaint against the Chinese government is that they purposely weaken their currency to make the cost of their exports cheaper and therefore more attractive to foreign countries. Your scenario of them having to buy up their own currency to prop it up - isn't a concern really. The Chinese govt. is the one lowering the value of their currency -- so the fact they have to buy it up now and again as they see fit is not a perceived problem for them. That's the biggest complaint with trade with China is their currency manipulation, specifically the lowering of their currency to make their goods cheaper on the international market.

There's a level somewhere that works best for the country...and it isn't always the strongest value.

[boxus]

Originally Posted by craigiri

That's not going to happen - but Trump is teaching the world a long term lesson - never rely on anything the USA says. Not treaties...not promises...nothing.

I think the world is getting the hint. But most Trumpies do not care. Yet.

Trump??

This has been said for decades now...A large part of US foreign policy has been maintaining the strength of the dollar (aka the petro dollar).

Anyone who even has the slightest interest and knowledge of US foreign affairs knows this.

[Northman83]

Why do you think the US is always meddling in oil rich countries?

To prop up the Petrodollar.

[Hoonose]

Originally Posted by cttransplant85

Its better to have a strong currency than not. It may hurt the economy in some ways like trade and tourism but overall it helps American citizens, consumers, savers it’s why we have the strong dollar policy. You ideally want a strong currency as it raises living standards. If your policy is to weaken your currency you can have a run on your currency and a total loss of confidence. Nobody wants to hold the yuan for example so the Chinese government is forced to make crazy moves like buying up all the yuan on the market to prop it up. Inflation is a transfer of wealth from people who hold money to people who hold assets. It hurts the poor the most.

The USA optionally depends more on imports than China right now, as our economy is more advanced. So we do better in general with a strong USD.

The opposite for China, still more export driven. This will change as their economy moves up to the first world. But right now they have no reason to prop it up.