A falling dollar is not all that bad. In general, seeing the dollar fall may be seen as a reassuring economic sign. Naturally, the first thing is that the dollar is retreating from high levels that were caused by the fears of the “Great Depression II” or when the world economy was going to the dogs and interest rates dropped to negative zones. People thought the US dollar was the last safe place to keep their money. A falling dollar helps exports and hurts imports, and that’s good too, mostly. It’s not an absolute, because oil is always traded in dollars, and a falling dollar means higher fuel prices, but the exchange rate lowers the price of American products overseas, and raises the price of imports. That helps the balance of trade, increasing exports of products and sales of anything else still made in the US.
On the other hand though, it is not a good time to be stuck with a fixed income that can’t adjust to inflation. But, likewise inflation is not that all of a bad thing either. It’s never nice to have prices go up, but when looking for deep discounts and bargain prices, one of the best motivators is concern about rising prices, the lure of the “sale”. If prices are likely to go up tomorrow, better buy today: a natural economic stimulus. Of course, no one would want rising prices all the time, but if you want to get business moving and put people back to work, rising prices are more effective than falling prices. People buying things then creates jobs, and the people who have jobs have more money and they start buying things, and pretty soon you have an economic recovery on your hands. So this is a good thing.
After two good things, isn’t this a good thing too? That is recovering to an “old economy”, spending more than is earned, borrowing ever greater amounts. Even after the dollar has lost $13 trillion in assets, tightening belts to pay down debts, terrified and desperate as jobs are lost, hours cut and benefits slashed. But consumers drive the economy as the US drives the world, or is this not so? Is this not a good thing? So “consumers” should not cut back so that businesses continue to invest, increasing profits rather than laying off workers and cutting back on costs. And with a weak dollar, exports soar amidst the stimulus plan, the ‘stabilizer’ rather than the increase in food stamps and unemployment benefits. But where will the jobs come from? Enter Wall Street, maybe if another bubble is produced that would assure 15 million people without jobs back to work. All sum up to a “good thing”, three good things so far.
Indeed, any ‘recovery’ requires fundamental reform of past and old economic strategies. While, holding those accountable at fault sustained and paid for through progressive tax reform while protecting those who pay without any fault. Discarding yesterday’s rotted fruit. Rather than allowing “inertia” and self and blinded interest drive us to revert, not “reform”. The old standards don’t play anymore. There is no recovery on that “old path”: only stagnation, crushing long term unemployment, growing inequality, a devastated middle class and a social bomb and Pandora box ready to explode. The course must be changed; the only question is how much pain we must have to endure before we actually learn our lessons. Sure, probably we can generate another bubble or two. Just maybe, or lose all control of our work, our pay, our housing, our health, our pension funds, our bank and saving deposits, our public lands. This system sinks, destroying livelihoods, displacing people, and feeding on life in an insatiable quest for money that systematically undermines the market and market economics without vigilant public oversight. Fundamental changes, trickle down supplanted by “public investment” led growth, large scale public investments in areas such as infrastructure, research and development, education and training until the economy starts putting people back to work.
Or perhaps, as most financial writers and reports continue ‘naively’ in space, not even looking at this tectonic shift. Rather succumb and are stuck on the ‘simple’ relationship like micro robots trapped in stale, wrongheaded thinking: stocks down, dollar up, stocks up, dollar down as Old Macdonald on a farm with the absence of pigs and horses. The dollar loses its primary reserve currency status, by in short, bad policies that induce rapid currency depreciation or high inflation: a reversal of fortune and overtaking of financial centers and a brand new banker to the world, a new economic and political hegemony emerges. The German philosopher, Friedrich Nietzsche, once said, “There are no facts, only interpretations.” Perhaps he was wrong; the prospect is real. But this is all a good thing!
