I bet there are a lot of you that think there is no way the USA dollar should go down any further. Matter of fact you probably think it is too low. WELL IT DOES NEED TO GO DOWN!
The USA dollar has been inflated for years which wasn't a problem during the tech' hay days. Then everyone was reducing costs dramatically but the field is relatively level again. Everyone has cut cost through technology, there isn't much left to benefit from.
So now it often gets down to cost of labor. If the USA dollar is high the labor cost is high and companies move elsewhere. If it is low costs are lower and companies hire in the USA. Pretty simple. It also applies to all the products USA exports & imports... A lower USA dollar makes imports(stuff USA buys from others) more expensive and exports(stuff USA sells to others) cheaper. This inherently creates jobs and fuels the economy.
If the USA dollar stays up USA business can't sell their products to others and others can dump their products on the USA market very cheaply making it even more difficult for USA to grow.
Is this a perfect solution... Absolutely not. This means a lot of people have net-net less buying power. However, it would drive business in the USA.
It is obvious to me that the USA government wants the dollar to stay low. They could easily step in and stabilize it but they choose not too. On the other hand they want a controlled reduction not a free fall. You can see this in the USA government moves and in reverse for the Canadian and other governments(warn against gaining to quickly).
If the USA government was smart they were buying other currencies to assist in devaluing the dollar. Then later when the dollar gets really low, pay off all the debts(they are all in USA dollars), then buy back the dollar by selling the other currencies they bought previously and drive the dollar back up. That would be a very sneaky move that would gain them a lot of money and may even bring them out of the currently inevitable financial collapse.
Again these are my rants, you can have your own ;)
Thursday, January 21, 2010
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Is this a conspiracy to keep the dollar up? Then again for the common man ... who cares!!!!!
ReplyDeleteWho reads this stuff anyways?