the lower dollar

[ringmastery]

What does it mean for the economy in the long-term?

[David Zephyr]

1. Lower Standard of Living for Americans.

n/t

[La_Serpiente]

2. less foreign investment

[DebJ]

4. love the Ernie system.....it's just as useful to me as the Fed's!

[papau]

3. Immediate Lower Standard of Living, higher interest rates in a year -

possible interest rates going much, much, higher at very fast rate in a few years - and recession - if trade deficit continues out of hand.

[Kathy in Cambridge]

5. Inflation too

[papau]

10. true :-)

:-)

[DebJ]

6. terrorists coming in to US will get more for their 'dollar'/Euro/whatever

....will encourage travel INTO the US

[wunnerfulrobin]

8. Dollar not yet at record lows; Euro is misleading

The Euro has only been around a few yrs. If you break out the euro to the previous currencies, we arent close to the lows. Same with the yen and others. Weak dollar for an extended period would drag on the foreign investment, but in the short term (couple yrs) we should be OK

[papau]

11. Agree we are not at lows on a look back basis - but another 10%?

Plus the faux euro data does not reflect current institutions and politics

[ComerPerro]

7. You know exactly what it means

It means that the next Democrat to be in office is going to get fucked over, severly.

And these conservatives who don't even filnch at spending billions in tax cuts to the wealthy and in corporate welfare will start screaming about cutting spending, and will try to slash every social program. Even education won't be safe.

The Democratic President will be villianized and demonized by the press, who will scream "scandal" at any and every opportunity. Expect to hear the suffix "-gate" frequently in the network news.

[scubadude]

9. More expensive imports, more domestic production. nt

[Fescue4u]

12. Generally bad, but there are advantages

Such as increased exports, more domestic production and it makes offshore-outsourcing more expensive.

On balance its a negative thing though.

[the populist]

13. (holding vomit inside)

I don't like saying this, but the lower dollar is a good thing. I wouldn't credit the Bush admin entirely (Greenspan is probably more influential), but I certainly can't criticize it as far as this is concerned.

The lower dollar is a bit like a non-antagonistic tariff. It increases our exports, but makes imports more expensive. That's a good thing considering our huge trade problems. That domestic production is still crumbling while the dollar is depreciating is frightening, however.

[DBoon]

14. Like crystal meth for exports

Makes US goods cheaper abroad, hence gives a nice "stimulus" to what's left of US manufacturing.

After the boost occurs, a crash, since the currency situation does not cover up structural problems.

A temporary boost that does not cure the underlying cause.

And need I mention the excessive agression and paranoia cause by Meth as another similarity?

[KoKo]

15. Rest of World Get's Sick of Propping Bush's Deficit...article here:

Rest of world gets sick of propping up Bush's deficit

January 5, 2004


The US economy is reflating fast. Too fast? Much depends on Asia, John Garnaut writes.The global flirtation with deflation is already last year's story. It has been washed away by torrents of money that the US Federal Reserve and the White House have let loose on the world.

The US central bank has never been so committed to keeping the price of money low. Few American presidents have been so profligate. With the help of Wall Street's financial markets, which are linking savers with spenders more efficiently than ever, their monetary and fiscal policies have reflated the world's economies.

Fed Chairman Alan Greenspan and President Bush kick-started the US economy to have it roaring at an annualised 8.2 per cent in the September quarter. They also helped rescue East Asia from years of deflation, via a complex monetary and currency reaction.
(SNIP)......
While US monthly data shows inflation remaining low, the market expects it to pick up soon. Expectations can be measured by the gap between yields on US 10-year nominal Treasury bonds and inflation-indexed Treasuries. It has roughly doubled to 2.65 per cent since early 2002.Similar "reflationary" trends are emerging in Korea, Taiwan, Hong Kong and Malaysia.

But if 2003 goes down as the year Greenspan and Bush saved the world from deflation, then the subsequent years may record how America was laid low by the cure.The extreme stimulus policies have been so successful that economists and market players expect they may soon be dancing to an unloved retro tune: seventies-style accelerating inflation.

MORE..........................
http://www.smh.com.au/articles/2004/01/04/1073151209953.html

[KoKo]

16. And Another: "Fed's Folly Will Come Due in 2004." Excellent read.....

http://www.thestreet.com/pf/markets/detox/10134346.html
Fed's Folly Will Come Due in 2004
By Peter Eavis
Senior Columnist
. Led by the Federal Reserve, the world's central banks have spent five years pursuing some of the most reckless monetary policies ever seen in the developed world. Next year, though, their barmy bets will finally start to come undone. The crackup won't start happening until the end of 2004 -- after George Bush, the market's favorite for president, has been safely re-elected -- but the coming deluge will usher in a period of global economic malaise and dire losses in financial markets. The fast-declining dollar we see today is an early indicator of the reckoning that Fed Chairman Greenspan has long tried to forestall, using unsustainable measures. America will be the epicenter of the bust, because it is here that debt totals, as well as trade and fiscal deficits, have risen to historically delinquent levels.

MORE.......and a very good read.......http://www.thestreet.com/pf/markets/detox/10134346.html