June 10, 2008

Strong Dollar Politics

For far, far too long, the Administration has allowed the dollar to become weak. Astonishingly weak, especially as compared against the power of the currencies of other industrialized nations (the Euro, the Yen) and it seems to continue falling in order to keep pace with the PRC's Yuan.

So finally, the President has announced that he intends to do something about this. Before leaving for a series of diplomatic meeings in Europe yesterday, Bush announced that "A strong dollar is in our nation's interests. It is in the interests of the global economy."

Well, I'm glad that he's finally figured that one out. It's really quite simple: a strong dollar means we can buy more stuff from overseas, and therefore gas prices will fall. The downside is that our products will become relatively more expensive for other nations to import, so we tend to suffer trade deficits while the dollar is strong.

But unlike our intental budget deficit, I don't think a trade deficit is necessarily a huge problem. As long as we have healthy industries that do export, and as long as we continue to generate wealth, a strong dollar is a good thing. A strong dollar is only bad if our trade deficit is so large that our manufacturing infrastructre deteriorates and we cannot generate new wealth to replace the lost productivity. Otherwise, a strong dollar means that imported oil -- sweet, sweet, oil -- is cheap.

"Strong dollar" = "cheaper gas." Simple as that. That's why a strong dollar is good politics.


bobvis said...

Sorry, but I can't get excited about this. Bush has *always* been talking about the need for a strong dollar. That's what any political leader does because if they were ever to say anything different, the currency would then *really* plummet.

Bush has always adopted the policy of tough talk backed by the softest of actions.

Burt Likko said...

Maybe McCain or Obama will figure this one out. It doesn't seem that difficult to me.