Why does it “look bad” when the dollar is weak or falling?
We are, after all, used to judging ourselves against others — comparing our salaries with the earnings of our peers, and our homes with those of our neighbors. We’re used to thinking it is a big advantage to stand at the top of a numerical list.
If not its currency, what truly determines the prosperity of a nation?
The measure of a nation’s wealth is the goods and services it produces, not the relative standing
of its currency. Take a look at 1985-88, when the dollar lost more ground than in the last few years. Those were good times, and the next decade was largely prosperous as well.
How does the weakness of the dollar reflect the success
of “other regions” (Europe,
If these regions are more productive, and if they produce better goods cheaper, American will choose to buy more foreign goods. Foreigners in turn will buy less American goods. This will create an excess supply for the dollar, as the demand for the dollar and American goods is falling.
How does the falling dollar cause inflation in the
A falling dollar does mean
price inflation in the
But imports are only 16
percent of the American economy, and most foreign suppliers have been reluctant
to risk their position in the American market by raising prices a great deal. And: Wal-Mart serves a more working-class clientele and it is stocked with goods
What are the advantages of a weak dollar? Which part of
Of course the lower value of the dollar also
makes American exports more competitive. American economy is continuing to
expand, and this is largely because of the strength of our export sector, as
encouraged by a low value for the dollar. Much of