can buy the same American stuff for the same price, but I have to pay more for the foreign stuff ... During these economic times, when jobs are a premimum explain why this strategy of weakening the dollar is bad.
I don't know if you claim to be conservative or liberal, but that's a typical liberal view of international finance matters, looking only at how it affects you directly, as if 1) you were the only person affected and 2) there were no indirect affects upon you.
In fact, when the dollar drops, the return on investment in our debt drops. At this time, over 45% of our debt is held by foreigners and much of that by Communist China. As those investors watch their ROI dropping, they begin to get yancy and eventually start dumping their dollar denominated paper, in favor of foreign currencies. This has already started. This drives the dollar even lower, which drives more foreign investors to dump their dollar denominated investments, driving the dollar even lower, driving more foreign investors to dump their dollar denominated paper, driving the dollar ... well, let's just suffice it to say that it's a self-feeding phenomena, as foreign investors rush to avoid being the last out the door. Even Warren Buffett announced in an article a few months back that he had lived nearly 72 years without investing in any foreign currencies. But, starting in the spring of 2002, his Berkshire Hathaway fund started diversifying away from the dollar and today, has a significant investment in a wide range of foreign currencies.
The result is stagnation (or stagflation, as it was called in the 70's) of the dollar. But, never before have we had so much of our debt held offshore, creating the very real potential of a crash of the dollar's value. If that happens, then that product that you think is mostly US made, will have to go up in price. That's because the JVC radio that comes with your Ford, GM or Chrysler product, will cost 10 times what it did before the dollar fell, not to mention the many other foreign made components (seat-covers, carpet, seat belts, wiring harnesses, etc.). Your PC will go up in price drastically, since more than 90% of all motherboards are made in Taiwan and other Pacific Rim countries. (Acer, in Taiwan is the largest motherboard manufacturer in the world.) You don't even want to think about what it will do to the price of cameras, that rely upon the high quality German and Japanese optics. Sure, the US produces great optics, but at 4 to 7 times the cost. And, let us not forget the gasoline, that you put in your car. It is purchased overseas and is paid for in dollars, though that may change. The continued weakness of the dollar has the Arabs and the Russians talking about requiring all purchases to be made in Euros.
So, yeah, with the receding dollar, your job may be secure. But, you won't be able to buy anything with the diminishing value of the salary that you receive, so you might as well be on the dole. And, even if you are one of the fortunate ones, who can afford to buy all that stuff, others won't be able to, so businesses, lacking customers, will start going under. Hey, you might be able to get some really good deals, as long as your job lasts and you can still afford to buy that distressed merchandise. But, if stagflation sets in, that won't last long.
Furthermore, it's only going to get worse. The one thing that this article does not address, is the excessive load on the dollar created by (ANTI)Patriot Act monitoring and investigations. Since all USD transactions go through the Fed and are subject to (ANTI)Patriot Act scrutiny and controls, many international investors are beginning to move away from the dollar, to currencies that are not so heavily controlled and monitored. As one prospective foreign investor in our company told me only a week or two ago, "I have no problem with letting my own government look through my books, but, I'll be dammed if I am going to let the US government nose into my most private financial affairs, just because I'm dealing in dollars." He told us that as a prerequisite to any deal that he does, all parties have to agree to do the deal in Euros or Japanese Yen. That's far from being the first time that I have heard that sentiment.
So, on top of everything else that is dragging the dollar down, add the excessive weight of (ANTI)Patriot Act requirements. It's more than just you who is affected and even you are affected much more indirectly, than directly.
Trade is about 25% of the economy. If you get 20% less for your money with 25% of your overall budget, you just lost 5% of your budget. Maybe you cut back and only trade for 20%, because foreign prices are higher. Fine so you just lost 4% of your budget. What you don't do is get anything.
Any currency can be driven to zero without asking anything of anyone abroad. It is just paper, you can just print it. But the world will not give you anything of real value for larger wads of printed paper. Everything you can do by selling cheaper, you can do just by choosing to lower your prices. Nobody forces you to keep them where they are. But you can't just lower somebody else's prices, aka raise the value of your own currency.
Paper currencies are, in the long run, a one way ratchet. Down is easy. The dollar counts as a "hard" currency by the standards of most of the world. But in just the last 2 generations it has lost 90% of its real value. You can always count on the inflations, the wars, the crises, the financial blow ups to come along from time to time and smack you lower. Nothing will keep you up the rest of the time, even modestly, except a firm policy in favor of a strong currency.