If you're trying to make heads or tails of the subprime woes and what's going on in the market, here's a brilliant explanation.. not brilliant in the Soulja Boy sense, but brilliant nonetheless.
Anyone notice that the Canadian dollar recently passed the U.S. dollar? Not only is our economy floundering, but our currency is blowing goats. Want to know why? One word: Spending. Imagine if you made $50k a year, but spent $500k a year. Now imagine that you did that for the last 30 years (other than 1996 - 2000). Do you think that your personal economic situation would be good? Hell no. And that is exactly what our government has been doing for the last 30 years, which is why our economy and currency have been stinking up the place. Anyways, the moral of the story is this - vote for someone who will cut spending. It will put more money into all of our wallets.
I don't know.. there are lines of argument out there that say a weaker dollar has been *good* for the economy.. it boosts exports (which helps manufacturing), reduces the trade deficit, shrinks imports, potentially boosts savings.
Further complicating things is that China's currency is pretty tightly pegged to the dollar - which is leading to a lot of angst in Europe because Chinese goods are becoming *even* cheaper in Europe. Which is good because you can afford that big screen tv, but bad, because it hollows out domestic manufacturing. So, needless to say, it's more complicated than good-bad. As is the idea that cutting spending puts money in your pocket. I think your job, your investments, and your spending have a bit more to do with the size of your wallet.
Here's a blog post that talks about it a bit: http://delong.typepad.com/delong_economics_only/2007/11/willem-buiter-c.html
But, then again, if we learned anything from that video.. "Strong" is good, and "Weak" is bad.. so therefore..
A weak dollar is good, please. Currency is nothing if it is not relative. A weak dollar just means that other countries' curriencies are catching up and passing ours.
Anyone notice that the Canadian dollar recently passed the U.S. dollar? Not only is our economy floundering, but our currency is blowing goats. Want to know why? One word: Spending. Imagine if you made $50k a year, but spent $500k a year. Now imagine that you did that for the last 30 years (other than 1996 - 2000). Do you think that your personal economic situation would be good? Hell no. And that is exactly what our government has been doing for the last 30 years, which is why our economy and currency have been stinking up the place. Anyways, the moral of the story is this - vote for someone who will cut spending. It will put more money into all of our wallets.
ReplyDeleteI don't know.. there are lines of argument out there that say a weaker dollar has been *good* for the economy.. it boosts exports (which helps manufacturing), reduces the trade deficit, shrinks imports, potentially boosts savings.
ReplyDeleteFurther complicating things is that China's currency is pretty tightly pegged to the dollar - which is leading to a lot of angst in Europe because Chinese goods are becoming *even* cheaper in Europe. Which is good because you can afford that big screen tv, but bad, because it hollows out domestic manufacturing. So, needless to say, it's more complicated than good-bad. As is the idea that cutting spending puts money in your pocket. I think your job, your investments, and your spending have a bit more to do with the size of your wallet.
Here's a blog post that talks about it a bit: http://delong.typepad.com/delong_economics_only/2007/11/willem-buiter-c.html
But, then again, if we learned anything from that video.. "Strong" is good, and "Weak" is bad.. so therefore..
A weak dollar is good, please. Currency is nothing if it is not relative. A weak dollar just means that other countries' curriencies are catching up and passing ours.
ReplyDeleteThat is certainly one way to over simplify Macro-economics to a point of bastirdazation.
ReplyDeletePat is right!
ReplyDelete