The dollar

[Relbeek Einre]

The dollar's about as weak as it's ever been. What implications does this have on our economy, Bushonomics, and the future?

[Embar Angylwrath]

A falling dollar can do a couple of things... have an inflationary effect (bad) and make our national debt cheaper to pay off (good), and make American produced goods ore competitive on the foreign market (good).

It really depends on how far the dollar falls, how much of the devalued currency is held by other nations, and how long the dollar stays depressed. A falling currency in and of itself isn't enough to tank an economy.

China has to be pissed though. They hold billions in AMerican debt, and that debt just got cheaper for the US to pay off.

[Aabe]

The dollar's about as weak as it's ever been. What implications does this have on our economy, Bushonomics, and the future?

Maybe imported stuff gets more expensive and we end up buying more stuff made here??

[Ddrak]

How do you figure it makes paying off the foreign debt cheaper? If the debt is held in US dollars then it still costs exactly the same amount (from a US perspective). If the debt is held in foreign currency then it costs more. If anything, a falling dollar makes foreign debt harder to pay off and not easier - at best it has no effect.

What a falling dollar does is devalues American goods and services relative to the rest of the world. In an economy which imports more than it exports (ie the US), this means a higher cost of living and lower effective wages. It also hinders economic recovery as foreign investment tends to dry up with people looking elsewhere to invest capital. If the benefits of having lower priced goods internationally outweighs the foreign investment pullouts and increased internal costs from an import-centric economy then it's a relatively stable thing. If however the increased cost of living and foreign investment pushes the economy down too far then you get negative feedback and the economy quickly goes into the shitter unless extraordinary (and usually painful) measures are taken.

As Embar states though, a falling currency isn't itself a breaking point. In fact it's usually a symptom of something else entirely - in this case the rising foreign debt the US has failed to demonstrate any measure of reigning in and a slow shift away from a US-centric world economy.

Dd

[SicTimMitchell]

A day late and a dollar short, as it were.

The Fed just raised interest rates another .25, resulting in a stronger dollar and causing gold prices to fall.

[Embar Angylwrath]

My bad.. meant to say trade deficit, not national debt.

That's what I get for posting without having some coffee.

[ZanypherCocoapuffs]

Japan used to accuse us of devaluing the dollar on purpose so they'd lose lots of money on the interests they own in the US.

Could be more of the same.

[superwalrus]

Relbeek... they are weakening the dollar on PURPOSE...

Its very easy to strengthen / weaken the dollar over the period of a few years... this is done intentionally..

Walrus

[SicTimMitchell]

Dollar coninues to rise.

[vaulos]

The dollar has been over valued for a number of years. It is actually good to see it fall for a while. But, we can't let it fall too far, because people will stop buying those bonds that the government puts out in order to spend more money than we take in.