I have been meaning to follow up on an excellent chart from the WSJ.

Also, I hear from D.C. that we have a strong dollar policy. Thank goodness! Imagine how bad the greenback would look if the gummint actually wanted it to go lower! (Yes, that is sarcasm).

Wsj_dollar_jump01172005222317_1

Meanwhile, Bloomberg’s Caroline Baum expresses her faux horror, wryly observing "What’s This? A Weak Dollar Isn’t a Miracle Cure?":

"As part of its December Business Outlook Survey, the
Federal Reserve Bank of Philadelphia included a special question
on the dollar. Respondents were asked to weigh the effect of the
decline in the dollar on both imported prices and exported
products.          The results weren’t exactly intuitive. More than half (54.4
percent) said the weaker dollar had a negative impact on business
from import prices while only 37.7 percent said it had a positive
impact on exports. The response to the question on imports
probably picked up the higher prices paid and the increased
competition from countries whose exchange rates haven’t
fluctuated very much, according to Mike Trebing, senior economic
analyst at the Philly Fed, who is responsible for the monthly
survey.         

Even more curious, 45.4 percent of respondents said the
dollar had no effect or a negative effect on exports (yes,
exports), which makes you wonder about prescribing a weaker
dollar as a fix for what ails the U.S.         

The benefits of a weaker dollar "may be lost by the adverse
effect on overseas economies,” which depend on the U.S.’s huge
appetite for imports to stimulate domestic output, says Jim
Glassman, senior U.S. economist at JPMorgan Chase & Co. In a perfect world, where the economies of all the U.S.
trading partners were growing strongly, a weaker dollar would
shift the balance of trade, Glassman says."         


Too bad we don’t live in a perfect world . . .
.

>
Source:
As Dollar Weakens, Hidden Strengths May Stave Off Crisis
Greg Ip
The Wall Street Journal, January 18, 2005
http://online.wsj.com/article/0,,SB110599912104528146,00.html

What’s This? A Weak Dollar Isn’t a Miracle Cure?
Bloomberg
Caroline Baum
http://quote.bloomberg.com/apps/news?pid=10000039&refer=columnist_baum&sid=aqTbwckhml5g

Category: Economy

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

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