Publié par : crise2007 | novembre 14, 2007

USA : Low Dollar: Not The Solution To Trade Deficit


Low Dollar: Not The Solution To Trade Deficit

 

Many think that a declining currency will fix America’s export problem- they are wrong.

With the dollar hitting all time lows in September, America exported an all-time high of $140.1 billion, yet still ran a monthly trade deficit (importing more than we export) of $56.5 billion. The balance of trade deficit shrank by a ho-hum margin of less than 1%.

A weak currency will not fix the fact that America is consuming far more than we produce. It actually could make the economy much worse.

A declining dollar decreases the net-worth of every citizen who holds it and threatens America’s status as the world’s reserve currency. Once the status as reserve currency is gone, America will no longer be able to afford the outstanding national and current account deficits. As a result, the standard of living for millions of Americans will plummet.

America’s trade imbalance solution is not a declining dollar; it’s political action that results in progress.

Progress is a pro-active government that invests to reinvigorate and strengthen domestic industry, and does not depend on a cheapening currency to do the job for them.

Progress is a mindset that doesn’t view a $56.5 billion monthly trade deficit as a success.

Progress, unfortunately, still seems to be a long way away.

source : http://www.economyincrisis.org/articles/show/1159

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