Quote:
Originally Posted by John Scott
Many economists will tell you that a weaker dollar will increase foreign investment in the US economy. It also makes our exports more affordable, one reason Japan tries to keep its yen cheap.
Very entertaining opinion. In your country, when a crime is being committed, does the government do a cost-benefit analysis before taking action? For example, if you were being beaten to death, would it really matter how many pesos it costs to save your life?
Pretty rediculous, eh? So is the suggestion that we should allow economics the direct our foreign policy.
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As USD weakeans against other currencies, US can export a lot. But what will you export? Fuel, Gold, Textile, Toys? None (materially) you have to export. USA's strength is science and Technology. The moment USD weakens, people behind it will fly away to far away destinations, thus draining the only possible export item.
Countries that have something (materially) to export can let their currency weaken against others. IMHO, USA is not a game to that.
As long as USD is high, you are well protected against 4 billion other potential competitors (world population). The moment USD drops, you have to compete with each one of them.