Fred For The Dollar
By ElCapitan Posted in Archived — Comments (13) / Email this page » / Leave a comment »
We need to get our fiscal house in order. A strong dollar is not only for pride and power-of-travel, but a matter of national security. A weak dollar makes us less wealthy as a nation, with less to spend on our national security and infrastructure.
What are the causes of a weak dollar? One of them is a long term structural budget deficit. Pork-barrel spending does have SOMETHING to do with this—don’t get me wrong—and I commend Senator McCain for being so hawkish on this issue. Only one candidate, however, is addressing the long-term problem, our ever-expanding entitlements, head-on: that candidate is Fred Thompson.
If we are to go on without addressing the issues of the SS & the welfare state, our nation will become like Atlas, sweating and trembling with the mighty weight of the world on his able shoulders. This story, however, does not have a pretty end: the weight of our entitlement programs will be too much to bear, and the mighty Atlas CAN AND WILL tumble to the ground and our dollar will fall like MC Hammer after the onset of gansta-rap.
As Newt has said, we are having an important national conversation about where we need to take the country in the post-Reagan-Bush era. Lets stick to our tried and true principles yet be innovative -as Fred's Social Security reform plan is- and get our fiscal house back in order. If Fred is not our nominee we must make sure that SS & entitlement reform remain front-and-center in any economic recovery package. The short term is important, but the long term is crucial.
If Fred's plan were passed into law today we would see an IMMEDIATE rise in the dollar. That is a message that can appeal not only to Reaganites, but to the Independents to whom we need to appeal in order to win in November and continue to move this country forward.
In 2000 before the Clinton-Gore recession, the dollar was too HIGH. Now it is significantly TOO LOW and continuing to drop...
Spitballs?!?! / Yo No Soy Marinero, Soy Capitan
the real goal is a STABLE dollar. Sure, it should be relatively strong, but if it rises too fast, it will hurt us as much as the fall. The investing public is making money on the "weak" dollar. The Europeans are much more angry about the weak dollar than our leaders. Our exports are killing countries with strong currencies, check out the stock price of Coca Cola during this "market meltdown".
I realize a falling dollar will kill us in the end. Our market is strong because of foreign investment. They do not want to see their investment returns vanish over currency exchange. But the weak dollar meme as an apocalypse can be over done. Our booming exports are saving this economy during a domestic consumption recession.
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Molon Labe!
you are correct that our over spending, and borrowing to pay entitlements has hurt the dollar. Our government borrows and borrows so it is deeply in debt. Of course if we put our finanical house in order, our currency will become more valuable as our balance sheet improves.
The thing is, what we really need is for other countries, such as China, India, Russia, and Brazil to increase their demand for foreign products. This will occur naturally as they grow their middle class. To date, the third world countries have been only exporters, they are flush with dollars so the value of the next dollar is relatively lower.
People are wrong when they worry about the time when China "stops lending us money", that time will never happen. They need to lend us money so we can continue to buy their products and stimulate their economies. They are flush with dollars, they do not want to buy from us, so they use those dollars to buy bonds. One brave economist actually posited the idea that we are scamming the rest of the world. We are getting products for our dollars, and they are getting little value from those dollars they do not use to buy our products.
I believe that in time, free market capitalism will make things better. The middle class will increase around the world, creating more buyers for our high tech products. What we need to do is improve our balance sheet, invest in education, and cut taxes on our companies. The future for this country is not commodities, but highly refined products and services. We need sound policy, education, and a strong business climate to continue to prevail.
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Molon Labe!
stuff. The weak dollar has very little to do with our ability to pay for national defense, since the best defense contractors in the world are American companies. If the dollar increased significantly in dollar starting tomorrow, we would be in big big trouble.
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Molon Labe!
Good point about the contractors being American companies. If these companies use any foreign components their products will be more expensive though...I recall when the dollar was STRONGER- now the Euro is about 3:2...do you think $1.15-$1.25/euro is a good balance?
Spitballs?!?! / Yo No Soy Marinero, Soy Capitan
I think that is a pretty fair range though. I think when they pegged it, it was about $1.12 or so, maybe a bit higher. Don't get me wrong, as an international traveller, I miss the days when a Euro cost 82 cents. That seems a long time ago, but I was in France when it happened in the winter of 2000.
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Molon Labe!
...but, with a currency price determined by the market, there are some definite feedback systems that appear to be developing with respect to international trade. At present I feel as though the dollar is undervalued, but $1.15 is still a bit too strong for it to be long-term. Unless something changes with our corporate tax structure to help drive exports, I would hazard a guess that the long run balance point for the Euro would be somewhere around $1.30-$1.35.
"No matter how much lipstick you put on the taxation pig, it's still a pig... and it's currently snout-down in your wallet." - Michael Fisk
...primarily because I think he should be running for Vice President, but...
Since you make the point, what's the story? Is Fred saying that we should spend less on entitlements as a proportion of national income in the future?
If so, then how does he plan to solve the political problem? There's quite a lot of seniors and soon-to-be-seniors that don't think it's a good idea for them to get a smaller check every month.
The weakening of the Dollar means US exports are likely to increase because our products are relatively less expensive to foreign nations. For the same reason a weak Dollar also means American's are more likely to purchase products made in the US. All that adds up to increased production which requires more man power which means more jobs. I think we can agree that more manufacturing jobs would be nice.
While there are benefits to having a strong Dollar there are also benefits to the Dollar weakening. I have also listen to discussions that the Dollar was artificially high and is starting to settle in to where it should be anyway.