Submitted by CARPE DIEM
George Mason economist Tyler Cowen explains in today’s NY Times why the falling dollar has been good for the U.S. economy:
So far the Federal Reserve and the Bush administration have shown little concern over the falling dollar (almost 20% since 2001, see chart above). This isn’t because of neglect or lack of interest; trillions of dollars worth of currency are traded every day, so policy makers have only a limited ability to push around long-term exchange rates, even if they wanted to do so.
In the case of the dollar, we need to stop thinking of its value as a marker of economic success. The American economy has its problems, but so far the low value of the dollar has proved more a benefit than a cost.
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1 user commented in " Good News: The Dollar Is Falling "
Follow-up comment rss or Leave a TrackbackThe falling dollar is a serious danger to the US economy. We depend on borrowing to keep things going, and the falling dollar makes it much less likely that foreigners will continue lending to us.
Two of the main causes of the debt explosion that is causing the greenback to sink.
1) The hugely expensive war in Iraq.
2) Bush’s massive tax cuts for the rich.
Trying to put a positive face on a dangerous situation is counterproductive, especially since it encourages continuation of bad economic policies that could lead to a global currency shock.
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