NationStates Jolt Archive

Many people debate about how bad the weak dollar is, but did it ever occur to anybody that it is a good thing?

Pros:Manufacturers can export more to other countries (because its cheaper for those other countries to purchase stuff from here esp. Europe)
More domestic vacations in America (insures money for the tourism unit, plus a lot of other industrys.)
Other nations civilians take vacations here (because it is cheaper) and buy a bunch of stuff which helps our econemy.
Hollywood will stay in the US (Sometimes they would film movies in Canada when it was not necesary because its cheaper) So that helps some local econemys.

Cons:Its harder for importers to buy stuff from other countries.
Americans cant take as many vacations to foreign countries. (Could be considered a pro because they are spending more money here.) (See domestic vacations under pros)


But the pros outweigh the cons. The weak dollar helps our nations econemy.

Did I miss anything? Please share your feelings.

You obviously didnt go to London for new years and stay two weeks like I did.


Then you'd be singing another tune!

The tune of selfish stupid anger at the dirty exchange rate :)

Definition of Inflation:
An increase in the general price level of goods and services; alternatively, a decrease in purchasing power of the dollar.

Goods will cost more not less.

Except America's trade deficit is widening, so it's obviously not working.

Many people debate about how bad the weak dollar is, but did it ever occur to anybody that it is a good thing?

Pros:Manufacturers can export more to other countries (because its cheaper for those other countries to purchase stuff from here esp. Europe)
More domestic vacations in America (insures money for the tourism unit, plus a lot of other industrys.)
Other nations civilians take vacations here (because it is cheaper) and buy a bunch of stuff which helps our econemy.
Hollywood will stay in the US (Sometimes they would film movies in Canada when it was not necesary because its cheaper) So that helps some local econemys.

Cons:Its harder for importers to buy stuff from other countries.
Americans cant take as many vacations to foreign countries. (Could be considered a pro because they are spending more money here.) (See domestic vacations under pros)


But the pros outweigh the cons. The weak dollar helps our nations econemy.

Did I miss anything? Please share your feelings.


Its a gamble in a way, If china still undercuts us on everything people everywhere want to buy, and we gut our currency but dont close the trade deficit, then we have an ingredient for a fiscal crisis.

Wise monkey rabbit says "keep eye on China, grasshoppah!"

Definition of Inflation:
An increase in the general price level of goods and services; alternatively, a decrease in purchasing power of the dollar.

Goods will cost more not less.


A cogent argument considering we import more than we export.

A weakening currency can be good up to a certain point. Allthough it is generally the sign of a state deficit. To fill the whole they simply give out more money to compensate.

Definition of Inflation:
An increase in the general price level of goods and services; alternatively, a decrease in purchasing power of the dollar.

Goods will cost more not less.
That' however, will be mostly for goods from outside the US. The US produces a lot, and has plenty of raw materials.

A weakening currency can be good up to a certain point. Allthough it is generally the sign of a state deficit. To fill the whole they simply give out more money to compensate.


The american government generally funds its deficit by borrowing money from china and japan and elsewhere.

The american government generally funds its deficit by borrowing money from china and japan and elsewhere.
Thats also a way to increase inflation. Though I wonder why they would want to borrow money from China? Maybe it's a scheme to have a future excuse to go to war against them.

Except America's trade deficit is widening, so it's obviously not working.
That is because most people can still afford to import things. The US is now mostly a service economy, with ever-expanding services overseas. What they make in foreign currencies rarely changes, but it'll translate into more dollars. Besides, investment in the US is still very strong.
The only time it'll start to work is when it makes a noticeable dent in most Americans' wallets. So far, it hasn't.
Still, it baffles me why more foreigners aren't buying US goods, despite their extremely low prices.

Thats also a way to increae inflation.
Not exactly. In fact, China and Japan do it in hopes of propping up the dollar, and thus keeping their exports cheap for Americans.

That is because most people can still afford to import things. The only time it'll start to work is when it makes a noticeable dent in most Americans' wallets. So far, it hasn't.
Still, it baffles me why more foreigners aren't buying US goods, despite their extremely low prices.


One question is this:

What US goods!?

We dont really manufacture and export that many goods.

Still, it baffles me why more foreigners aren't buying US goods, despite their extremely low prices.
We have our own products. Generally better quality. We don't mind, not realy, to pay a bit more.

Not exactly. In fact, China and Japan do it in hopes of propping up the dollar, and thus keeping their exports cheap for Americans.


The yuan is pegged to the dollar, a drop in the dollar does not increase the relative price of chinese goods on a currcncy-exchange basis.

One question is this:

What US goods!?

We dont really manufacture and export that many goods.
Well, I mean the basics that many Americans buy, like food. Fuel prices have gone up, but that's not because of the dollar. Most oil-exporters price oil in dollars, anyhow.
And since China has pegged its Yuan to the dollar, currency fluctuations don't work into all of those consumer goods from there.

The yuan is pegged to the dollar, a drop in the dollar does not increase the relative price of chinese goods on a currcncy-exchange basis.
Still, China needs to keep its neighbors wealthy by propping up the dollar. They rely on most of their investments from either the US, or their Asian neighbors, like Japan.

One question is this:

What US goods!?

We dont really manufacture and export that many goods.

Actually thats not true.

Well, I mean the basics that many Americans buy, like food. Fuel prices have gone up, but that's not because of the dollar. Most oil-exporters price oil in dollars, anyhow.
And since China has pegged its Yuan to the dollar, currency fluctuations don't work into all of those consumer goods from there.


The falling dollar *can* have an effect on the price of oil denominated in dollars for this reason:

As the dollar falls, oil producers must raise their prices to get the same ammount of value out of the oil they sell as they once did.

I.e, dollar falls 10%, prices rise 10% (not meant to be realistic or exact numbers) to compensate.


Also, the temptation to denominate oil in the Euro grows as the euro becomes a stronger currency.

If that happened, the dollar would be forced to shore up.

The falling dollar *can* have an effect on the price of oil denominated in dollars for this reason:

As the dollar falls, oil producers must raise their prices to get the same ammount of value out of the oil they sell as they once did.

I.e, dollar falls 10%, prices rise 10% (not meant to be realistic or exact numbers) to compensate.


Also, the temptation to denominate oil in the Euro grows as the euro becomes a stronger currency.

If that happened, the dollar would be forced to shore up.
Oh, of course. But most of the OPEC nations said they won't. The dollar will probably rise in a couple of years, anyhow. The Euro will also eventually fall. In fact, back in 2000, it was worth only 83 cents.

Still, China needs to keep its neighbors wealthy by propping up the dollar. They rely on most of their investments from either the US, or their Asian neighbors, like Japan.
According to Chinese media the EU is China's biggest trading partner.

According to Chinese media the EU is China's biggest trading partner.
Yes, but that's only for trading. The US and Asian nations lead in investment in Asia, particularly Japan and South Korea. The EU definitly invests a lot, but they must not invest as much.

That is because most people can still afford to import things. The US is now mostly a service economy, with ever-expanding services overseas. What they make in foreign currencies rarely changes, but it'll translate into more dollars. Besides, investment in the US is still very strong.
The only time it'll start to work is when it makes a noticeable dent in most Americans' wallets. So far, it hasn't.
Still, it baffles me why more foreigners aren't buying US goods, despite their extremely low prices.

Generally because European & Japanese goods are better quality & Chinese/Korean goods are cheaper.

Generally because European & Japanese goods are better quality & Chinese/Korean goods are cheaper.
That's mostly a generalization. There are some sub-sectors in the US manufacturing sector that regularly outpreform, like machinery and medical equipment. I also believe that the US tech companies missed an oppritunity to regain the manufacturing lead from the 1990s, and not because of the bursting bubble.