Fixing the dollar...

[slupilot01]

I don't know if this has already been posted previously...long time reader, first time posting. With this said, I am curious about something...I keep hearing how oil prices keep going up as the dollar becomes weaker and weaker. My question is, what are some things the Federal Government can do to help turn the dollar around and make it stronger again? Thanks.

 

[Gilding the Lily]

I don't know if this has already been posted previously...long time reader, first time posting. With this said, I am curious about something...I keep hearing how oil prices keep going up as the dollar becomes weaker and weaker. My question is, what are some things the Federal Government can do to help turn the dollar around and make it stronger again? Thanks.

It is a great question slu... but I am not entirely too sure that the Fed necessarily wants a reversal in the dollar right now. In Bernake's latest testimony, he belabored the idea that the weak dollar helps cut the trade deficit. The Federal Reserve sees a cheaper dollar as helping the U.S. economy.

So, to answer your question, the fed would have to start actually wanting to make the dollar stronger. (There is debate as to whether a stonger dollar would help the average-joe).

 

[slupilot01]

It is a great question slu... but I am not entirely too sure that the Fed necessarily wants a reversal in the dollar right now. In Bernake's latest testimony, he belabored the idea that the weak dollar helps cut the trade deficit. The Federal Reserve sees a cheaper dollar as helping the U.S. economy.

So, to answer your question, the fed would have to start actually wanting to make the dollar stronger. (There is debate as to whether a stonger dollar would help the average-joe).

Now, while reducing the trade deficit is a great idea, how does that help the average middle-class / lower-class worker? It seems that our weak dollar is causing retail prices, oil and fuel prices, and so much more to be going through the roof and costing everyone more money on the same goods than last year...heck, a gallon of milk runs almost 4 to 5 dollars (just one example). I guess to me it just seems that while the lower dollar helps the trade deficit, it seems to be hurting so much more...but thats just my impression.

 

[tech2101]

Now, while reducing the trade deficit is a great idea, how does that help the average middle-class / lower-class worker? It seems that our weak dollar is causing retail prices, oil and fuel prices, and so much more to be going through the roof and costing everyone more money on the same goods than last year...heck, a gallon of milk runs almost 4 to 5 dollars (just one example). I guess to me it just seems that while the lower dollar helps the trade deficit, it seems to be hurting so much more...but thats just my impression.

The weak dollar increases FDI in United States based companies. Foreign currency can by lots of stuff in the U.S. right now. The only thing the U.S. has not done is manage to convince people outside of America to come here and spend their vacation dollars here. That goes to our foreign policy of hate/fear mongering coming from the "W" administration. Nobody feels like they will be welcome here if they are from other than here...imagine that?

 

[Gilding the Lily]

As mentioned, the dollar's decline makes U.S. goods cheaper abroad, boosting exports to a record and shrinking the nation's trade deficit. That presumably means that U.S. business are selling more goods than they would if the trade deficit didn't shrink. That, in turn, could keep some average-joes in a job that they may have otherwise lost.