NationStates Jolt Archive

Some people are talking about how it is bad to have a weak dollar. Why?

Unless you want to travel abroad a lot, I don't see how it matters to us. With a weak dollar, we export more and import less, which eliminates the trade deficit. A strong dollar is beneficial to the nations that export stuff to us, namely those in Asia, which (i think) is why their banks are buying our bonds. They want to keep the dollar from falling so they can continue to export.

It also means that on the large scale we are unable to buy as much as we could when the dollar was stronger. That can be a good or a bad thing, really. The strength of a nation's currency shows its economic health, so generally we don't want to go down.

Basically with a weak dollar you can import less and export more. China and other trade nations will benefit from US manufactured goods, cars, tech, information etc., but the US middle class will probably suffer because cheap foreign 'made in China', items will be more expensive to import and thus consume.

I think though, that the US is deliberately forcing its dollar down, this is in response to China's unwillingness to float its own currency, and this might actually work.

With a weak dollar, we export more and import less, which eliminates the trade deficit.
Yet inflation and a weaker dollar does no help the budget deficit.

This is also true, but I think the US has the power to make its dollar stronger by eliminating its deficit by slashing spending, and the dollar raising in return.

I think the US if it really wants to focus on the economy and eliminate its deficit, can, and will. However, it is not in their best interests to do until Iraq is resolved and there is some trade equilibrium with China.

When Iraq is won/lost and military spending is cut, and debt begins to be repaid, there will be more faith in the dollar again.

China and other trade nations will benefit from US manufactured goods, cars, tech, information etc.

Since when does China need to import manufactured goods? They're a highly industrialized nation, man. They've got a much deeper industrial base than the US, at any rate.

You get me wrong, I don't mean the bulk of all manufactured goods.

Manufactured goods may have been a poor label to use, but for instance we get refrigarators from Sweden, cell Phones from Finland, semi-conductors from Taiwan etc., there are some goods manufactured in the States and sent to China and vica versa, sorry if there was any confusion.

The dollar going slightly down is a good thing, as the government has been keeping it artificially high since the Reagan years. It will cut down on outsourcing and increase exports.

The dollar going down too far too fast, however, will decrease people's faith in the dollar and they may stop buying bonds/try to cash in bonds. This would tank the economy altogether. In order to pay out, the US would have to start calling in its debts, tanking the entire world economy and beginning another depression worse than the Great Depression.
Of course, this is absolute worst-case scenario which I doubt we'll get anything near.

Since when does China need to import manufactured goods? They're a highly industrialized nation, man. They've got a much deeper industrial base than the US, at any rate.

Three quarters of china's population are still rural peasents most of which whom only earn a few hundred dollars a year. It is only really the Eastern Costal areas which are highly developed.

Foreign debt is a problem when your currency weakens, as well.

A bonus to the dollar going down is that it pisses off the major EU countries, France and Germany in particular, because most of the stuff they sold us was high end expensive and it got even more expensive since the dollar is losing value and the euro is gaining value.

It also means that on the large scale we are unable to buy as much as we could when the dollar was stronger. That can be a good or a bad thing, really. The strength of a nation's currency shows its economic health, so generally we don't want to go down.

that not 100% true the US econ is doing better than the EU hands down the growth is higher and the job market way better . the Dollar is low becasue of the defits one that can be easly managed and the fact we are in a war that means having dollars is more of a risk than befor .

and man in china walmart crap isnt going to be more expenisve . it will stay the same casue china linked the yaun to the dollar . but i do think this bussness of weaking the dollar is a great way to stop china . when they float there currncey it will rise in value and the hurt exports and pop the bubble that has been bulding there since the early 90s . the bubble there is worce than the US before 1929 . and soneone made the remark of china being industralized . it is but on a 1950s leval i do lots bussness over there and onceu get out of the big costal town .... its still a third world nation also the growth figures coming out of china are about as good as those coming out of the USSR befor the fall . the take them in regionals not in one over growht estamte . witch i could explain but dont want to for it will take about 2 more pages . point is the date of 10% growth Qarters is sketchy

Three quarters of china's population are still rural peasents most of which whom only earn a few hundred dollars a year. It is only really the Eastern Costal areas which are highly developed.

Okay, 75% is still agrarian - that's still 250 million Chinese living in the highly developed east, certainly nothing to sneeze at.

It also means that on the large scale we are unable to buy as much as we could when the dollar was stronger. That can be a good or a bad thing, really. The strength of a nation's currency shows its economic health, so generally we don't want to go down.

that not 100% true the US econ is doing better than the EU hands down the growth is higher and the job market way better . the Dollar is low becasue of the defits one that can be easly managed and the fact we are in a war that means having dollars is more of a risk than befor .

and man in china walmart crap isnt going to be more expenisve . it will stay the same casue china linked the yaun to the dollar . but i do think this bussness of weaking the dollar is a great way to stop china . when they float there currncey it will rise in value and the hurt exports and pop the bubble that has been bulding there since the early 90s . the bubble there is worce than the US before 1929 . and soneone made the remark of china being industralized . it is but on a 1950s leval i do lots bussness over there and onceu get out of the big costal town .... its still a third world nation also the growth figures coming out of china are about as good as those coming out of the USSR befor the fall . the take them in regionals not in one over growht estamte . witch i could explain but dont want to for it will take about 2 more pages . point is the date of 10% growth Qarters is sketchy


Wow, um, spellcheck?

Okay, 75% is still agrarian - that's still 250 million Chinese living in the highly developed east, certainly nothing to sneeze at.

I was just being a know it all jerk. Even though most of China's population is dirt poor they still have a middle class of like 100 million people with a lot of disposable income.

An interesting thing I read about about china in the NY Times --I think last Sunday,http://www.nytimes.com/2004/12/04/business/worldbusiness/04banker.html is they are trying to divest from the dollar to diversify their holdings away from the dolalr into other currencies. The japanese still refuse to do so because they are afraid if they stop buying dollars it will cause a global panic and everybody will get rid of their dollars causing the value of the dollar to collapse, which will hit Japan hard since they have been buying up American Treasuy bills for a long time and have not really divisified their holdings. Furthermore they are trying to prop up the dollar to make japanese businessmen happy so they can sell more toyotas to Americans.

However the Chinese and others are getting pretty worried about the plumeting dollar and are looking to stop financing american debt to the extravagant levels which they have done in the past. If we keep up our massive defict which I think is now 5.7 percent of GDP other countries will eventually grow weary of propping up our currency and interest rates will go up and our economy will probably tank.

The dollar going down too far too fast, however, will decrease people's faith in the dollar and they may stop buying bonds/try to cash in bonds. This would tank the economy altogether. In order to pay out, the US would have to start calling in its debts, tanking the entire world economy and beginning another depression worse than the Great Depression.
Of course, this is absolute worst-case scenario which I doubt we'll get anything near.

You can't cash in bonds early - only at the maturity date. They can, however, be sold on a secondary market.

You can't cash in bonds early - only at the maturity date. They can, however, be sold on a secondary market.

True, but if that price spirals downwards, and the futures market tanks, and all US$ holdings become effectively worth squat...We'd be in trouble. The fact that the US is the world's reserve currency is now being questioned, since the dollar isn't worth what it used to be, effectively the whole world is losing money.

I have no problem with a weaker doller ;) Just means I can import stuff over to england allot cheaper.

With a weak dollar, we export more and import less, which eliminates the trade deficit.
The trade deficit is essentially a myth.

A weak dollar also means that German cars are much more expensive. With fewer German cars being bought here, the German unemployment rate, currently around 10.5% will possibly go up more, thus putting pressure on the anti-American leadership there. Never a good thing to bring your biggest ally to anger.

It also makes French goods much more expensive too...and do I really need to go into the disaster that is the French economy?

In time our "allies" will feel the pinch and their domestic discontent just might bring about a change of leadership. Then maybe we will take the necessary steps to bring the dollar back up to a more realistic value.

Until that time comes, Germany and France can just stew in it for awhile.

While there are some who wonder why Europe and the US seem to be out of step with each other, one reason is that after WWII, when the US sent advisors to Europe to help form the new governments there, those advisors came from the current administration here. A Democrat administration. So is it any wonder that our European friends took on a more "socialist" direction since thats what the Truman administration gave them to work with? That they want the US to take that same path today is simply astounding to me.

While there are some who wonder why Europe and the US seem to be out of step with each other, one reason is that after WWII, when the US sent advisors to Europe to help form the new governments there, those advisors came from the current administration here. A Democrat administration. So is it any wonder that our European friends took on a more "socialist" direction since thats what the Truman administration gave them to work with? That they want the US to take that same path today is simply astounding to me.
This is a little arrogant point of view. Europe has an history of its own. Socialism was in the agenda since far before WW2. The US has nothing to do with that.

Today
EUR/USD 1.3457 +0.47%
Russia is considering selling its oil in euros instead of dollars.
As a side note : Saddam was considering that too...

Today
EUR/USD 1.3457 +0.47%
Russia is considering selling its oil in euros instead of dollars.
As a side note : Saddam was considering that too...


And that's when things really start to become interesting.

If Oil starts to become sold in euros then the US deficit really starts to bite.

It will probably mean that the UK joins the Euro sooner and that shouldn't be a bad thing with the dollar continuing to spiral downwards.

This is a little arrogant point of view. Europe has an history of its own. Socialism was in the agenda since far before WW2. The US has nothing to do with that.

Yes, Europe does have a history of it's own. However, there is NO doubt that the advisors sent over by Truman had significant influence over the formation of the new governments, especially in Germany. They assisted in the writing of the new Constitution.

Yes, Europe does have a history of it's own. However, there is NO doubt that the advisors sent over by Truman had significant influence over the formation of the new governments, especially in Germany. They assisted in the writing of the new Constitution.
If anything, this influence was against socialist policies. I believe the USSR, France and UK had as much influence in Germany as Truman.

So is it any wonder that our European friends took on a more "socialist" direction since thats what the Truman administration gave them to work with? That they want the US to take that same path today is simply astounding to me.
That the US refuses to take that same path today is simply astounding to me.

If anything, this influence was against socialist policies. I believe the USSR, France and UK had as much influence in Germany as Truman.

The USSR had influence over East Germany. France and the UK only over their sectors. The US advisors all but created the West German Constitution and therefore the Government of West Germany which is in power today. France also created a new government with assistance from US advisors. The Marshall Plan was also instrumental in the creation of these new governments, the monies being used to create the basis of stability that they were built upon.

That the US refuses to take that same path today is simply astounding to me.

Yeah.....they have done SOOOO well over there. Unemployment rates twice ours, taxes 3-5 times ours. Yeah, you go right ahead and head that way if you like.

Yes, Europe does have a history of it's own. However, there is NO doubt that the advisors sent over by Truman had significant influence over the formation of the new governments, especially in Germany. They assisted in the writing of the new Constitution.
Yes, because Europe is in fact, one country, and in helping to write one new Constitution, you changed the whole European political map. Never mind that the UK, for one, was already heading in the direction in which it continued after the war.

basically, strong currency=high purchasing power on international markets, typically low inflation, high price of goods exported-also, strong currencies bring in FDI because you can sell them as 'refuge values' and because foreign investments valued in strong currencies tend to be more profitable for the investor.
weak currency=low purchasing power, typically high inflation, low price of goods exported

Clearly, a weak currency will benefit a powerful industrial nation (some would say it would also benefit agricultural nations but experience does not show great benefits to have been attached to cash-crop models of economic development) with its economy geared towards export, while in all other cases a strong currency is better; unfortunately for you, the US is hardly a powerful industrial nation anymore, so America's much-vaunted tertiary economy is likely to prove a millstone for the current strategy of reducing trade imbalance.

taxes 3-5 times ours. Yeah, you go right ahead and head that way if you like.
I would gladly pay 3-5 times more taxes if it meant I had free healthcare and other things.

The USSR had influence over East Germany. France and the UK only over their sectors. The US advisors all but created the West German Constitution and therefore the Government of West Germany which is in power today. France also created a new government with assistance from US advisors. The Marshall Plan was also instrumental in the creation of these new governments, the monies being used to create the basis of stability that they were built upon.
In France, De Gaulle created the 4th republic. Now it's the 5th. De Gaulle also made the Breton woods monetary accords colapse. He was hardly influenced by the US when he did that.

Yeah.....they have done SOOOO well over there. Unemployment rates twice ours, taxes 3-5 times ours. Yeah, you go right ahead and head that way if you like.
Once again, using one country as an example (Germany) to generalise about the whole of Europe - the UK has very low unemployment rates at the moment, for one.

And, erm, well, we're more socialist, so we get more for our taxes, don't we. I think 3-5 times might be exaggerating somewhat. I don't know, but I doubt your tax rates are as low as 5% or so.

Yes, because Europe is in fact, one country, and in helping to write one new Constitution, you changed the whole European political map. Never mind that the UK, for one, was already heading in the direction in which it continued after the war.

Thats true, but Germany and France were not. Not to mention the other "occupied" countries whose governments had to be re-created. Like it or not, Germany is a major influence in Europe. The UK not so as there is always that air of isolationism they have from the rest of Europe.

It effects the US position in the World Market.

Once again, using one country as an example (Germany) to generalise about the whole of Europe - the UK has very low unemployment rates at the moment, for one.

And, erm, well, we're more socialist, so we get more for our taxes, don't we. I think 3-5 times might be exaggerating somewhat. I don't know, but I doubt your tax rates are as low as 5% or so.

Actually my tax rate is around 5%. Thus giving me more of my own money to do with as I please. However, not only does Germany have a high unemployment rate, so does France. My point being that BOTH of those governments were all but created by advisors sent by a Democrat administration here in the US. Such is the legacy that they left. That our friends in Europe wonder why we rejected Mr. Kerry and his ideas only have to look at where they are to see why.

I think Blackadder himself would have to be my favourite character.

Yeah.....they have done SOOOO well over there. Unemployment rates twice ours, taxes 3-5 times ours. Yeah, you go right ahead and head that way if you like.
Unemployment rate is not twice yours. It's not the same standards when calculating the numbers of unemployed people. In the US, you are unemployed if you already worked andduring 13 weeks after you lost your job, and only if you ask to be registered as such. In Europe, you are unemployed for several years, if not life, since you are 25, if not 21.

I would gladly pay 3-5 times more taxes if it meant I had free healthcare and other things.

You want free healthcare? Ok, join the military, become a veteran and use the VA health system. It is free. Just remember, you get what you pay for and the VA system is what everyone would be using. No thank you. As a disabled veteran I would rather pay for my healthcare on my own. Only in that way do I have a choice as to who sees me and where.

Actually my tax rate is around 5%. Thus giving me more of my own money to do with as I please. However, not only does Germany have a high unemployment rate, so does France. My point being that BOTH of those governments were all but created by advisors sent by a Democrat administration here in the US. Such is the legacy that they left. That our friends in Europe wonder why we rejected Mr. Kerry and his ideas only have to look at where they are to see why.
The democrats are not socialists. Europeans don't give a shit about the democrats. They hate Kerry. They just want Bush out.

You want free healthcare? Ok, join the military, become a veteran and use the VA health system. It is free. Just remember, you get what you pay for and the VA system is what everyone would be using. No thank you. As a disabled veteran I would rather pay for my healthcare on my own. Only in that way do I have a choice as to who sees me and where.
Of course if a health system is underfunded it's not going to be any good, which is why higher taxes would help it. Not to mention that there would have to be a war worth fighting for me to join the military, and I don't see that happening.

Unemployment rate is not twice yours. It's not the same standards when calculating the numbers of unemployed people. In the US, you are unemployed if you already worked andduring 13 weeks after you lost your job, and only if you ask to be registered as such. In Europe, you are unemployed for several years, if not life, since you are 25, if not 21.

So what you are saying then is that the 10.5% unemployment rate in Germany represents those who are unemployed for several years or for life? If that is so, then the rate is many, many times more than it is here.

Of course if a health system is underfunded it's not going to be any good, which is why higher taxes would help it. Not to mention that there would have to be a war worth fighting for me to join the military, and I don't see that happening.

Oh, the VA system is well funded. They are building new hospitals all the time....the difference is that the care is provided by the lowest bidder. Those who will do it cheaper will ALWAYS get the contract. If THATS what you want...you are welcome to it. Maybe one day you will be in a position to see how the government runs things. Once you do, you will NEVER want to be in one of their programs again.

So what you are saying then is that the 10.5% unemployment rate in Germany represents those who are unemployed for several years or for life? If that is so, then the rate is many, many times more than it is here.
No that is not what I was saying. I was saying that people are still counted as unemployed after 13 weeks in Europe.
Anyway enough of this bullshit. The US and Europe are not comparable. My original point was that the US did not influence european socialist trend, which predates WW2.

Oh, the VA system is well funded. They are building new hospitals all the time....the difference is that the care is provided by the lowest bidder. Those who will do it cheaper will ALWAYS get the contract. If THATS what you want...you are welcome to it. Maybe one day you will be in a position to see how the government runs things. Once you do, you will NEVER want to be in one of their programs again.
Oh, I see where I messed up. I said socialized healthcare, but I meant socialized medicine.

So what you are saying then is that the 10.5% unemployment rate in Germany represents those who are unemployed for several years or for life? If that is so, then the rate is many, many times more than it is here.
the 10.5% in Germany is basically all adults who do not have a job. In the US the unemployment is previously employed adults who have lost their job relatively recently, since not only od you have to have worked before but they also strike you from the unemployed lists after a while (at least that's what they did when my mother was young, before she moved here). And FYI, you get far more value per currency unit of taxes than you possibly could from the private sector. The reason is simple: taxes are not-for-profit, so you should want to pay more.

I ask a reverse question why is a strong dollar good?

After all we wouldn't use terms like strong and weak if they meant the opposite.

But I see a weak dollar as bad because then we lose our ability to prove we are the best nation as terms of dollar worth.

the 10.5% in Germany is basically all adults who do not have a job. In the US the unemployment is previously employed adults who have lost their job relatively recently, since not only od you have to have worked before but they also strike you from the unemployed lists after a while (at least that's what they did when my mother was young, before she moved here). And FYI, you get far more value per currency unit of taxes than you possibly could from the private sector. The reason is simple: taxes are not-for-profit, so you should want to pay more.
Not to mention that if you are employed in Europe, you're more likely to make a living wage.

Not to mention that if you are employed in Europe, you're more likely to make a living wage.
Plus average hours and number of holidays are better in Europe.

I have also talked to people in some video games who play from Europe who make more than I do on welfare. :gundge: <-- funny smilie

I am not saying that is "bad", but I do however feel jilted.
I don't think European and American economics are at all correlated as to what the Euro and US dollar working against each other suggest, but that both regions work better during their own spurts of nationalism, e.g. the Irish recently surpassing the British in GDP/capita, and Italy 10 years ago, with "Il Surpasso" etc., Germany under Hitler, and the US after World War II. Europe is not less well of than the US because of its more "socialist" policies, and nor is the US worse off because is has a much higher disparity between the rich and poor. It is just a matter of subjective thinking of what someone thinks is individually more important, and how nationalistic peoples and their leaders are, Germany was absolutely destitute... seriously, wagons of money for a loaf of bread, and was turned around by Hitler in 10 years due to rampant nationalism.

If people spent less time complaining about the state of their nations, and more time trying to innovate ways to remedy the problem I am sure the world would be a better place,.... for you.

How come when you say europe you mean western and not all of it? If your going to try and make us look bad economicly why not us Romania or some other non-EU poor eastern european country?

It isnt bad at all! The pound is doing very well out of it, thankyou very much.

*waves Unions Flag*

It isnt bad at all! The pound is doing very well out of it, thankyou very much.

*waves Unions Flag*
WE ARE THE EU, YOU WILL BE ASSIMILATED, RESISTENCE IS FUTILE.

*votes UKIP*

No wait, Im not a moron....

*votes labour*

Wait a minute...

*spins round*

*head explodes*

Oh but my dear its not! I'm in the Euro zone and wil be traveling to your honourable country next feb and at $1=E1.33 I'm a very happy camper!!