Look at the experience of every country that has devalued its currency. First, you get a trade advantage and sell a little more to other countries. Then you realize you are paying more for imports. (China/Walmart anyone?) Then you have inflation. Bad inflation. Then your standard of living goes down. And your standard of living stays down.
How do you like your dollar devaluation now folks?
The trouble is, because everyone and every thing (the Feds and the states, counties and cities - and probably you) in this country is living on borrowed money, when the borrowing stops, the standard of living must go down and stay down. Now show me the politician who is willing to take the responsibility for that.
I’m not living on borrowed money. I worked 80 hrs a week and had to be away from all all the time and missed much of my kids growing up so that I managed to retire before I was 47.
This oil spill may end up driving me back into some kind of career activity, if just because it will take away my ability to go fishing all day it looks like.
Having said that, the price of imports going up to the point where they can’t compete with domestic products is probably a good thing. I used to be a huge free trader as most MBAs are but for our country, we can’t have both free trade status and maintain a strong currency vis-a-vis the rest of the world with the costs of livings and US dollar living standards we have in America.
That’s what spurs outsourcing.
I think dollar depreciation represents one way to at least bring down unemployment and therefore ensure stability. Would I stand to lose money? Absolutely. It’s why I’ve begun reducing my liquidity and putting it into what I hope are fiat proof assets. It doesn’t mean I can’t see that from the macroprospective the US is facing a lot of unattractive choices and devaluation of the dollar is among the least unattractive of them.