Good News: The Dollar Is Falling
George Mason economist Tyler Cowen explains in today's NY Times why the falling dollar has been good for the U.S. economy: So far the Federal Reserve and the Bush administration have shown little concern over the falling dollar (almost 20% since 2001, see chart above). This isn’t because of neglect or lack of interest; trillions of dollars worth of currency are traded every day, so policy makers have only a limited ability to push around long-term exchange rates, even if they wanted to do so.
In the case of the dollar, we need to stop thinking of its value as a marker of economic success. The American economy has its problems, but so far the low value of the dollar has proved more a benefit than a cost.
6 Comments:
I'm retired. My savings are in dollars. My pension is in dollars.
Can you say "unfunded liabilities?"
What better way (for the country) to handle the issue of unfunded liabilities than to make the problem go away by making the dollar worth less than expected.
We got what we needed from the boomer generation and now it's time to get more out of them.
I'd suggest that we start hyping the benefits of not retiring but volunteering ones time for the good of the country and community.
It's a feel good solution to a real problem that threatens our great country.
It makes our country stronger (also reduces the risk of civil unrest) and makes the boomers feel better about working for nothing while receiving less and less in real pension benefits.
Everyone wins!!!
If your savings are in dollars then switch them to something else.
UC Berkeley economist Brad Delong wonders whether the dollar is leading to a depression.
"So far the Federal Reserve and the Bush administration have shown little concern over the falling dollar (almost 20% since 2001"
Or almost 35% since 2003...(#@$!%# spin doctors!
Interesting idea, Thomas. So, just how does one go about switching a pension to somethng other than dollars? I'm afraid most Americans are stuck with dollars and in Bernanke we trust.
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