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andrew

who cares? contrary to popular belief, a weak dollar is not a bad thing. it is actually good for the domestic economy. it allows direct foreign investment & spending in the u.s. which helps to balance out the horrendous current account deficit that we have been running. a currency is not a scorecard to judge how our domestic economy is doing against the rest of the world. in fact, its not even a contest.

policy makers who are not aware of these basic economic principals or who clouds them with extraneous ideas better have a damn good reason.

andrew

is there any wonder why the dollar is weak?

http://money.cnn.com/2005/02/10/news/economy/trade/index.htm?cnn=yes

David

The biggest problem posed by a weak dollar is inflation. The more concerning aspect is that the twin deficits require that our government borrow to finance the shortfalls. As a result, we end up paying US$ billions annually in interest; much of which go to foreign entities. This is called a "poor allocation of resources".

andrew

so a strong(er) dollar would help the 2 deficits? isn't the current account deficit the direct result of a booming economy & that is what gives rise to a strong dollar & also causes inflation on the side? with the budget deficit being a whole other (fiscal) story? wouldn't a weak dollar work toward lowering the current account deficit & help control spending from the private & govt sectors & thereby lowering inflation?

and to follow the u.s. govt borrowing money to finance the deficits logic: to lend money to the us, foreigner must buy u.s. treasuries with us dollars & shouldn't that strengthen the greenback? which btw, is how the chinese is keeping its currency from going through the roof.

Ezra Roizen

I thought Harry Stonecipher (CEO of Boeing) made an interesting comment on the dollar in the most recent issue of time:

TIME: How do you feel about the U.S. economy and especially the trade deficit?

STONECIPHER: The economy is in good shape. And I don't understand why people are jumping up and down about the "weakness" of the dollar. It's perfect. I think it's just a problem Americans have with the word weak. We should change it to "a marketeer's dream."

http://www.time.com/time/insidebiz/article/0,9171,1025156,00.html

andrew

our spending power (economy) is going so strong, it doesn't look like the weak dollar is helping the current account:

U.S. Trade Deficit Grew to $58.3 Bln in January as Imports Surge to Record

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