Comments on: Above par https://quoderat.megginson.com/2007/09/21/above-par/ Open information and technology. Fri, 21 Sep 2007 22:19:53 +0000 hourly 1 http://wordpress.com/ By: david https://quoderat.megginson.com/2007/09/21/above-par/#comment-711 Fri, 21 Sep 2007 22:19:53 +0000 http://www.megginson.com/blogs/quoderat/2007/09/21/above-par/#comment-711 John: I’d take it a little differently. Ideally, a currency should be in sync with the underlying economy: if it’s too high you’ll have trouble exporting and will have more labour trouble (it’s harder to cut nominal pay than to raise it), and if it’s too low, you’ll pay too much for imports (and the U.S. is a net importer, don’t forget) — the rising cost of oil is a good example, where the tumbling U.S. dollar makes things look even worse than they are.

If the U.S. dollar is more-or-less in sync with its economy right now — which is what I think you’re suggesting — then the low U.S. dollar isn’t a problem in itself, but it is a symptom of something more serious, perhaps the country’s very high public- and private-sector debt.

]]> By: John Cowan https://quoderat.megginson.com/2007/09/21/above-par/#comment-710 Fri, 21 Sep 2007 22:01:06 +0000 http://www.megginson.com/blogs/quoderat/2007/09/21/above-par/#comment-710 “Strong” and “weak” are really sucky terms: everyone thinks they want a “strong” currency and not a “weak” one, but that often turns out not to be the case. The weak U.S. dollar is probably worse for foreign investors than for locals, because most trade is still domestic, and it all moves together.

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