Trump adds $1 TRILLION in DEBT (with pitifully insignificant economic growth)
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He's a So-con. He never had any.
Ask him about tax credits. That always gets his panties in a knot
Oh come on! I don't need that kind of imagery in my head. I suffer enough trauma as it is.
I did. We should now talk about the 10% decline in the US dollar this year. I'm sure the Trumpites will be lining up to thank Don for that great news
Hm.
Correct me if I'm wrong here, but in a protectionist state (such as the one that left wing leaders like Trump are fostering), a low dollar would be a very bad thing, no?
Correct me if I'm wrong here, but in a protectionist state (such as the one that left wing leaders like Trump are fostering), a low dollar would be a very bad thing, no?
A low dollar is not in itself a bad thing. The problem though is that it increases the risk of inflation. If you can manage a low dollar without inflation, it can even have advantages in terms of promoting exports. The problem though is that a low dollar usually leads to inflation over the long term. I guess a low dollar over a short period of time might not be so bad if it returns to its previous value before inflation sets in.
I know that a low dollar is actually good for us when it comes to trade.
But if you're in a protectionist state, wouldn't you need to have a strong dollar?
But if you're in a protectionist state, wouldn't you need to have a strong dollar?
Why would you need a strong dollar in a protectionist state? A dollar is still a dollar at home isn't it? Do you notice a difference here with our $0.75 U.S. dollar? If the Americans want to be a net exporter they have to de-value their currency on the foreign market while protecting it's value domestically like we do in Canada.
Of course a low dollar is high risk, but not bad in itself as long as it doesn't lead to inflation. The problem is that, exceptional circumstances aside, it does lead to inflation.
When it might not lead to inflation is when it was already overvalued and the economy suffers deflation.
There exist different ways to devalue a currency. Japan tried that for decades until it exploded in its face. The more a country's exports outnumber imports in value over time will push the currency up. Japan tried to force its currency down and so could export export export and never import until it couldn't hold its currency down anymore and then it bubbled uncontrollably. That wasn't the only reason for Japan's ailing economy, but it certainly was a contributory factor.
China will pay the price. In my opinion, the government should just let the currency float. If it tries to manipulate it in any way, it's like a pressure cooker. You can manipulate it only for so long before it explodes out of control.
Instead, the government should focus on only four things:
1. Interest rates.
2. Inflation,
3. Debt.
4. Economic efficiency (such as ensuring quality public education, promoting economies of scale through free trade, etc.).
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