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Not so much in a regime of floating exchange rates and large volumes of major currencies trading in the global marketplace.
The Iranian Oil Bourse opened in early 2008 to shrieks of "The End Is Near!" from US Chicken Littles. The bourse has been so successful and influential that most people have never heard of it.
If you woke up one morning and an announcement was made that the US dollar was devalued by 10%, what would the practical application of this be to the average citizen?
I can't imagine a scenario in which a currency would be devalued 10%. Currency devaluation is the response to massive Monetary Inflation. You can look at currency devaluation in Romania where 10,000 ROL became 1 RON. Other foreign States that have devalued their currencies are Brasil, Zimbabwe and Italy.
Nixon didn't just take the US dollar off the gold standard, he also hedged that bet by entering an agreement with Saudi Arabia to accept only US dollars for Saudi oil (in exchange for military protection and cooperation). That agreement was subsequently extended to the other Saudi Peninsula states.
That agreement--still in effect--forces all nations that purchase Saudi oil to first buy US dollars, which supports the value of the dollar.
So what would happen to the value of the dollar if that agreement were abrogated and the Saudi Peninsula producers began accepting other currency, specifically, how would US workers/consumers feel it?
They will cry for Attacking a Terrorist founding State managed by the Saud Family...
"kill their families, Take their oil".... Trump.
Gadafi/Saddam Hussein Requested Gold for Oil.... They were accused of Terrorism by USA.
Now Iran is agreeing with Obama to sell oil in Dollars..... Then Iran is not as dangeros as Arabia said....
It would be roughly the same as buying a lot of flashlight batteries and sending those across the border. Gold and silver are just industrial commodities. Aside from their usefulness in manufacturing bright shiny objects (and some electrical circuits), there is nothing at all special about them.
Yep, I'm always amazed at how many people dismiss fiat money as being actually worth anything, while saying we should instead base our monetary system on an arbitrarily chosen soft shiny metal that conducts well.
I advocate we base our money on stocks of Lawrencium instead. Forget mining that gets your shoes dirty, instead whoever has the biggest/best particle accelerators can buy more stuff. Plus Lawrence Welk was an underrated showman, Lawrence of Arabia didn't actually get buggered by a train of Turks, Lawrence Taylor is still the greatest pass rushing outside linebacker of all time, and have you seen those Jennifer Lawrence stolen pics? Sheesh.
Mixed bag.
Benefits: makes US goods cheaper, encourages exports, maybe brings jobs.
Drawbacks: some products more expensive, the US becomes less attractive to investors, leading to less construction.
Why do you think the US would be less attractive to investors?
A lower US$ value will tend to increase domestic investment in production of goods and services, and close the trade gap. Foreign tourism would increase and US-foreign tourism would decline. The job market would improve and real costs would decline. For the great majority of the population it would be a good thing.
Why do you think the US would be less attractive to investors?
A lower US$ value will tend to increase domestic investment in production of goods and services, and close the trade gap. Foreign tourism would increase and US-foreign tourism would decline. The job market would improve and real costs would decline. For the great majority of the population it would be a good thing.
The US would become less attractive to foreign investors because profits would be lower when translated back to local currency. Especially if further dollar depreciation is expected.
I've never heard of a company deliberately trying to keep its stock price low.
The US would become less attractive to foreign investors because profits would be lower when translated back to local currency. Especially if further dollar depreciation is expected.
I've never heard of a company deliberately trying to keep its stock price low.
The US would become less attractive to foreign investors because profits would be lower when translated back to local currency. Especially if further dollar depreciation is expected.
I've never heard of a company deliberately trying to keep its stock price low.
There are many important variables at play and you are only considering one. And an insignificant one at that.
A high US$ means high costs, so production moves to other countries. How much profit is made domestically when production disappears? What happens to jobs? The US needs to be attractive to domestic investors. There is no lack of domestic capital! It will be attractive to foreign investment also if the production costs are low enough to be competitive. An overvalued $ ensures that this isn't the case.
The US$ value has no relationship to a stock price. Chinese currency has been undervalued for decades, and look what has happened to their economy!
It isn't mysterious. The US$ has been overvalued for decades, which is precisely why we have persistent high trade deficits and depressed wages, and we've needed to acquire debt to fill the hole.
There are many important variables at play and you are only considering one. And an insignificant one at that.
A high US$ means high costs, so production moves to other countries. How much profit is made domestically when production disappears? What happens to jobs? The US needs to be attractive to domestic investors. There is no lack of domestic capital! It will be attractive to foreign investment also if the production costs are low enough to be competitive. An overvalued $ ensures that this isn't the case.
The US$ value has no relationship to a stock price. Chinese currency has been undervalued for decades, and look what has happened to their economy!
It isn't mysterious. The US$ has been overvalued for decades, which is precisely why we have persistent high trade deficits and depressed wages, and we've needed to acquire debt to fill the hole.
Value, not overvalue! The USD remains the safest, largest and most liquid store of value in the world. Even at such low interest rates. Within reason its value is what the world says it is. Plus or minus some Fed shenanigans.
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