Weak US Dollar: Good Or Bad For The Current US Economy?

My wife has been begging me to take her to Greece for quite some time now. I promised her that I would as soon as we got all of our short term debt paid off from the wedding, honeymoon, and a token amount on a credit card. We should be in a position to do this sometime this summer. But with the weakness of the US dollar, a trip to Europe is really going to kill our bank account that we have reserved for extra curricular activities. After scratching my head, I asked the question?

Is a Weak US Dollar Good or Bad for Our Current Economy?

I first of all want to say that there are no right answers here, and therefore I do not claim to have any sage wisdom or conclusions that will shake the earth. I merely want to provide what I believe to be pros and cons of a strong and weak currency for my country.

A weak dollar seems like a horrible thing to Americans because of our usual nature and belief that our countrie’s economy is bullet proof. We also enjoy our traveling and fear that we will have to stay home more if the value of the dollar keeps declining. But with jobless claims in the United States at ridiculously high levels, we need to begin to repair this with growth on our own turf. The US rate cut yesterday to 0.25 marks a concerted effort to jump-start the US economy by giving banks the ability to borrow money from the Federal Reserve for virtually nothing. The combination of a weak US dollar and low interest rates just might be the perfect combination for creating jobs here at home and increasing our exports. Sound like a country we’ve heard of before? China has been in this cycle for years. Their currency has been undervalued to the point where the US has stepped in and tried to make then increase the value of the rinminbi. Why do you think the US has outsourced so many of our jobs to foreign countries like China in the east? It’s because it’s financially responsible for our businesses because of our currency differences.

A case for rebuilding a strong US dollar

While we do need to build jobs here in the US, there doesn’t have to be a weak dollar and strong exports for us to do it. When the US dollar is strong and investments in our US companies are booming, people have more money to spend at home on our non-staple items. The father of a friend of mine is the vice president of McDonald’s Asia division. He hit it right on the head when his father isn’t worried because ‘McDonald’s is almost recession proof’. I began to think about this in a new light when I realized he was right. When you only have a couple of dollars to spend for dinner, you are going to opt for the cheaper dinner option. Food is a staple, but new cars and new designer clothes are items that our society are beginning to learn to live without for the short-term.

With the weak US dollar right now and financial collapse, US investors are pulling their money out of our stock and financial markets at an alarming rate. A strong currency favors low inflation which also helps our economy in the long run for the local consumer. I think the perfect solution right now is to have the dollar low for the time being so that we learn our lesson from this financial mess, increase our jobs at home through strong exports, then to be financially responsible when the dollar rebounds so that we keep growth strong in the United States of America.

I have started the conversation, now let’s get your opinions below in the comments section. We need more input so see what everyone believes is the best solution for the Greenback.

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