Saturday, August 17, 2013

Good News – Weaker U. S. Dollar

Huh- How Can That Be Good – Well It Is

The problem with terminology is that it often conveys a message which is at odds with itself.  For example, currency exchange rates are expressed in terms of ‘strong’ and ‘weak’.  If the dollar is depreciating against other currencies it is described as ‘weak’.  And nobody wants a weak, sniveling dollar.

But in many situations, and certainly the current situation a weak U. S. dollar is good for the economy.  The reason, lower exchange rates make exports less expensive to U. S. customers abroad, and lower exchange rates make U. S. imports more expensive the U. S. customers here at home.  The result, the economy is stimulated by increased exports and diminished imports.

Bright spots for the U. S. economy
Republicans just hate that

So the news that after a rise during the first half of the year the U. S. dollar is now falling is good news.

The dollar is stumbling as investors begin to question the relative strength of the U.S. economic recovery, which had powered a rally in the greenback in the first half of 2013.

The WSJ Dollar Index, a gauge of the dollar's exchange rate against seven of the world's most heavily traded currencies, is down 4% in the past month and hit a seven-week low on Friday. Before the selloff, which began after the dollar hit a three-year high in early July, the U.S. currency had been up 8.3% for the year.

But of course everyone can expect the Republicans to politicize this news, criticizing Mr. Obama for presiding over a weak dollar.  It’s not that they don’t understand the value of a weaker currency (they don’t,) it’s that they just don’t care.  Anything to criticize the President.

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