Monday, January 4, 2010

Benefits of the Declining Dollar

In Sunday's Cincinnati Enquirer, I argue that:
In recent months, the value of the U.S. dollar has resumed the downward trend it was on prior to a big, but short-lived, spike in the financial panic last fall and winter. The falling dollar has been fodder for critics of the administration and Federal Reserve. While a "weak" dollar sounds like a bad thing, it just may help put the US economy on a more solid footing.
We sent that to them a while back, when the falling dollar was in the news. Of course, its strengthened a bit since then since then. At least they didn't print my e-mail address this time, so I haven't received any irate e-mails from the good people of Cincinnati. However, a comment on the Enquirer's website expressed one of the drawbacks:
Mr. Craighead, the seniors who will be drooling into the burgers they are flipping due to greatly reduced retirement savings can't wait for your lower-worth dollar. Maybe we can vacation at Branson and drink cheap beer with box-made grits instead of steak-frites avecvin de maison en France. Only an academic could intellectualize the disintingration of hard-earned wealth and quality of life with such eloquent assurance. Truth is, a weak dollar robs people of what they own and only helps those in a position to profit from others' misery: issuers of bonds, insurance companies, fastfood chains, etc. You teach this?
While I did mention in the piece that there is a downside for consumers, I think it is relatively modest... Overall, I suspect most people would rather be employed and drinking domestic beer than unemployed and borrowing to pay for Lowenbrau.


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