Never fails to amuse me. The press pretty much says anything economic is bad news. Not sure why. Stock market up? Well, they'll fuss about plunging bond rates.
EVERYthing is bad, for EVERYone.
One of the ones that never fails to tickle me is when they put out breathless, hyper-scared stories with headlines like this: Dollar slumps; euro hits record high
Sounds awful, right? WEAK DOLLAR! WEAK AMERICA!!
Well, forgive me, and remember that I only had micro- and macroeconomics in college so I'm handicapped, but a weak dollar isn't necessarily bad. Except maybe for Europe.
See, when our dollars are cheaper versus other currencies, it means American goods are less expensive in those countries than they might be otherwise. Which means that American goods--absent any obstructionist legislation from them danged foreigners--are much more attractive to consumers. Foreigners buying more of our goods does a good thing--it shrinks the trade deficit that we run with other countries, and provides jobs for American workers. Remember when the yen was so low a few years back, and everyone was complaining about being flooded with cheap Japanese goods, and it was upping our trade deficit (more goods coming in versus fewer American goods going out) with Japan?
Same deal with the dollar and Europe.
The one thing it does do is make it harder for people travelling to Europe to spend as much as they thought they would (yeah, I know--the heart bleeds) and does make it more difficult for industries that might rely upon European raw materials or products used in the manufacture of other goods.
ANYway, here's an article from the Federal Reserve Bank in Atlanta that provides a much more comprehensive look at what the fluctuating value of the dollar can do for consumers and the economy.
As it is, don't expect me to drop to my knees screaming in horror if the dollar slips a bit more, or goes up, or stays the same. It's not nearly the big story the media have us believe.
Yeah, I know--imagine that.
Posted by Terry Oglesby at April 27, 2007 03:47 PM