Do we really want a strong Dollar?

[Tilted]

There are so many aspects to this consideration and I won't even try to get into them. I'm more interested in people's general sense of the issue - do we want a strong US Dollar (by strong, I mean highly valued relative to other currencies - I don't mean stable)?

For reference, a 10 year US Dollar Index chart:



A 1 year US Dollar Index chart:



And, a 1 year EURO / US Dollar chart (note: the US Dollar is on the Y axis in this one, so a falling chart line means a strengthening Dollar):

View attachment 1 Year Euro-US Dollar chart.bmp

 

[Larry Gude]

Yes, we do.

A strong dollar means our economy is this sane, rationale thing where a dollar is a dollar and people will try to earn a buck and it will be worth earning.

Weak dollar means all sorts of machinations in housing, oil, oil, oil, gold, you name it, seeking stability and store of value for the dollar earned. It makes for a confusing economy for the common man and woman.

Will it hurt exports? Yes. So, we simply build better stuff that people can't get from China and India.

Will it help imports? Yes but, again, if we are building bigger, better, stronger, faster here at home, we will buy at home because that is where the good stuff will be.

There will also be global wealth flocking to the US to use that dollar as a store of wealth meaning lots of money for us to borrow to make bigger, better, stronger faster that requires a better paid person than someone whose primary skill set is border crossing, strong back, weak mind. Not meant as an insult but as a general analysis of what is required.

There are broad implications for sure and, certainly, much of this is beyond me but, as a principle, a strong dollar, for you or me to have a dollar that is very valuable, is better than having one that is less valuable.

 

[Tilted]

Larry - how much are you arguing in favor of a stable Dollar and how much are you arguing in favor of a high relative value Dollar? It seems to me that you are doing more of the former than the latter. Being a preferred reserve currency and exchange currency has more to do with stability and liquidity than relative value.

 

[Larry Gude]

Larry - how much are you arguing in favor of a stable Dollar and how much are you arguing in favor of a high relative value Dollar? It seems to me that you are doing more of the former than the latter. Being a preferred reserve currency and exchange currency has more to do with stability and liquidity than relative value.

You know more about this crap than I do so, you tell me.

All I know is oil went to the moon and is still WAY too high because people are parking dollars there that they moved out of housing and that they don't trust putting into the general stock market.

 

[Tilted]

You know more about this crap than I do Not really. so, you tell me.

All I know is oil went to the moon and is still WAY too high because people are parking dollars there that they moved out of housing and that they don't trust putting into the general stock market.

I think you are speaking mostly in favor of a stable Dollar. It's probably hard to argue with that. As for whether it's good to have a strong Dollar in the sense that it has a high value relative to the Yen, Yuan, Pound and Euro, I don't think there is a clearly 'right' answer.

That said, one of these days I'd like to play St. Andrews and Carnoustie, so I'm thinking climb, Dollar, climb.

 

[Larry Gude]

I think you are speaking mostly in favor of a stable Dollar. It's probably hard to argue with that. As for whether it's good to have a strong Dollar in the sense that it has a high value relative to the Yen, Yuan, Pound and Euro, I don't think there is a clearly 'right' answer.

That said, one of these days I'd like to play St. Andrews and Carnoustie, so I'm thinking climb, Dollar, climb.

I think I am for a higher value dollar. :shrug:

 

[Aerogal]

If I may... I am very worried about the the dollar. It seems to me that our govt has been slowly causing the dollar to devalue on purpose for the last 40 years and this has been accelerated by BO & Co.
I love having a strong Dollar, it means I am wealthier, I can get more bang for my buck, it means my investments and dividend earnings are higher. Our country is stronger and healthier too.
I'd rather deal with the fluctuations of a strong dollar backed by gold and silver than a stable worthless piece of paper.

 

[Tilted]

I think I am for a higher value dollar. :shrug:

I get that, and I'm certainly not disagreeing with you about it being a good thing - I really don't have a definitive opinion on that. My point was that the points in your original post seemed to me to relate more to Dollar stability (and perceptions thereof) than Dollar value.

 

[Tilted]

If I may... I am very worried about the the dollar. It seems to me that our govt has been slowly causing the dollar to devalue on purpose for the last 40 years and this has been accelerated by BO & Co.
I love having a strong Dollar, it means I am wealthier, I can get more bang for my buck, it means my investments and dividend earnings are higher. Our country is stronger and healthier too.
I'd rather deal with the fluctuations of a strong dollar backed by gold and silver than a stable worthless piece of paper.

A high value Dollar (relative to other currencies) means you can get more bang for your buck when it comes to foreign products and services - that I'll agree with. To the extent that President Obama & Company have been trying to devalue the Dollar, it would seem that other nations have been trying at least as hard to devalue their own currenices (and re-value ours). The US Dollar Index is pretty darn close to where it was when President Obama took office, and the Dollar is actually up a little versus the Euro since then.

I'll leave the gold backed currency discussion for now - that's a somewhat different kettle of fish, and perhaps a messy one.

 

[Larry Gude]

I get that, and I'm certainly not disagreeing with you about it being a good thing - I really don't have a definitive opinion on that. My point was that the points in your original post seemed to me to relate more to Dollar stability (and perceptions thereof) than Dollar value.

Which means I probably don't know WTF I am talking about because I thought my points were tied to a higher value dollar.

 

[EmptyTimCup]

I want;

$ 3500 Ford Mustangs (new of course w/BB 429 CJ)

.25 per Gal Gas

$35,000 houses

one phone company ....

no day traders .... stock investments that are years, not to short sell

back in the gold standard ... silver in my coins

 

[andazz]

we need strong not weak dollar

i have heard some experts say a weak u.s. dollar is good for america. i don't buy this at all. a weak dollar hurt our standard of living, and how will we pay for our public debt? i think a strong dollar shows the strengh of our country and will help get us out of this economic mess.

 

[Mongo53]

There are advantages/disadvantages to a strong or weak dollar. That is why you see business trends change with the dollar, weak dollar its advantageous for exports and foreign investment in the U.S. (foreign dollars buy more than they did in the past) and a strong dollar its advantageous for a imports and foreign investment by the U.S. in other countries (U.S. dollars buy more than it did in the past).

I would think a stable dollar is most important, NOT cycling up and down, as well, I think a strong dollar is "one" of many indicators of a relatively strong economy compared to others. A strong dollar alone does NOT mean the economy is great, its one of several indicators people should be looking at. Like most in the thread, I really don't enough to state a definitive opinion.

Keep in mind, intentionally devauling the currency is something banna republics have done to solve their debt crisis. Half the value of their currency, and they've halfed the amount of debt they owe, they also have halfed the value of their peoples savings and retirements at the same time, that is why you see riots when the government does this.

Something to keep in mind as we continue to build a mountain of national debt, at some point other countries that buy that debt will decide its NOT a good investment anymore, and if one does it, likely the rest will too, and we become a banna republic overnight.

Jobs going overseas, sure you can argue the strength of the dollar is a factor, BUT its minor at best. Jobs going overseas is the result of societal and industrial evolution of the nations of the world, and global trade and interlinked economy. More advanced countries with better education and higher standards of living, should be doing the more advanced and complicated jobs and services and the developing nations should be doing the simplier and less skilled jobs. I know some people don't like that, and of course nothing is perfect and you can find examples of abuses, BUT, sorry the U.S. can NOT live stagnant in the past and isolate itself and ignore the rest of the world, there would be even less jobs and prosperity.