irvinef

Implications of the Ongoing Dollar Decline

I am betting that the dollar to continue an orderly decline. Unlike Roger and other commentators, the DOLLAR DECLINE IS A GOOD THING. It makes U.S. exports more competitive. The reason the industrial sector is booming is because the dollar has returned to competitive levels. Caterpillar, Boeing, Harris Corp., and all our other industries are now selling to the Rest of World (ROW) aggressively. Its keeping GDP growth strong and the unemployment rates low...which especially benefits low income people. There is nothing like low unemployment to convince firms to give people without a great resume a chance.

If you go back, the dollar appreciated 20% in the late nineties because foreign investors, wanting to invest in our stock market boom, bought dollars first and bid up the dollar. This made U.S. exports too expensive and U.S. producers started outsourcing to survive. Manufacturing employment peaked in 1998 when the dollar made exports too expensive.

Fortunately, this time around, the ROW is booming, foreign stock markets are rising faster than ours, so the dollar is drifting lower, helping our exports, job growth, profits, and in turn the U.S. stock market.

An orderly dollar decline is good for the USA.

What could kill this situation, protectionist moves by Congress. We are in a global boom that is benefiting us. Do not let misguided politicians mess it up. Support free trade.

Owen Irvine