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America Doesn't Need A Strong Dollar Policy

America Doesn't Need A Strong Dollar Policy

The BriefGet Up To Speed

It'€™s often taken for granted that America needs a strong dollar.  When the value of the U.S. dollar is strong relative to other currencies, it becomes attractive to investors and allows Americans to buy foreign goods and services cheaply.  But in times of recession, are we better off with a weak dollar that stimulates U.S. manufacturing by making our goods cheaper and more competitive? Or will the loss of purchasing power and currency manipulation abroad, offset the potential gains?

FOR

Our exchange rate is just a price — the price of the dollar in terms of other currencies. It is not controlled by anyone. And a high price for the dollar, which is what we mean by a strong dollar, is not always desirable.

Saturday, May 21, 2011
Christina Romer

If it is possible to engineer a steady decline of the US dollar without spooking the bond markets, this would be the best of all possible worlds for the US policy-makers.

Thursday, May 26, 2011
Willem Buiter and Ebrahim Rahbari

The only plausible route for reducing the trade deficit is lowering the value of the dollar.

Wednesday, February 1, 2012
Dean Baker

So who really wants a strong dollar? While some American consumers might benefit, most producers wouldn’t and almost all equity investors would be harmed.

Tuesday, January 24, 2012
Evan Schinidman and Daniel Nadler

The global economic crisis has revealed the folly of large U.S. budget and trade deficits, as well as of the strong dollar that makes them possible. If it is serious about recovery, the United States must balance the budget, stimulate private saving, and embrace a declining dollar.

Tuesday, December 1, 2009
C. Fred Bergsten

There are powerful forces that will cause the dollar to decline over the next several years. The declining dollar can strengthen the pace of our recovery but only if the reduced foreign demand for dollar bonds doesn’t trigger very large increases in U.S. interest rates.

Monday, August 1, 2011
Martin Feldstein
AGAINST

The US strong dollar policy is not strong enough. The Obama administration says it supports a strong dollar, but its major fiscal initiatives suggest otherwise. As our currency erodes, the U.S. strong dollar policy needs to be enhanced so those who claim its mantle are held accountable to achieve it.

Wednesday, April 11, 2012
Emil W. Henry

What revived the 1990s’ economy wasn’t higher taxes, but a strong greenback and credible Treasury secretary.

Friday, November 23, 2012
Andy Kessler

‘Sound’ money means a stable-valued currency and a price system that reflects true scarcities. When the dollar is strong, it retains purchasing power over time against goods and other currencies.

Monday, October 27, 2008
John Chapman

Thanks to the Fed’s weak dollar policy, the U.S. faces an inflation problem and so does the rest of the world. The weak dollar and the lack of “flexibility” — properly understood — also threaten the free flow of capital and the stability of the international monetary system.

Sunday, May 1, 2011
Steve Hanke

CFR Senior Fellow Steil says continued weakness in the dollar could be costly for the U.S. economy since the United States will spend more on critical imports like energy, which it cannot produce enough of domestically to meet demand

Monday, October 19, 2009
Benn Steil interview

Empirical evidence reveals that new money creation leads directly to devaluation of the dollar. That’s already been a visible result of the Fed’s actions.

Saturday, December 8, 2012
John Tamny
OVERVIEW/BACKGROUND

Who gains and loses when the dollar falls.

Sunday, December 6, 2009
Bill Marsh

This report examines several factors that are likely to influence the dollar’s medium-term path, what effects a depreciating dollar could have on the economy, and how alternative policy measures that could be taken by the Federal Reserve, the Treasury, and the 112th Congress might influence the dollar’s path.

Thursday, February 23, 2012
Craig K. Elwell

The Federal Reserve System—or the "Fed" as it's known—arguably plays the most crucial role in the U.S. economy. Yet most people have little idea how the Fed works, what it actually does and why its decisions have so much impact.

Friday, January 28, 2011
Mark Koba

The term ‘monetary policy’ refers to what the Federal Reserve does to influence the amount of money and credit in the U.S. economy.

Wednesday, December 31, 1969

It has become fashionable to predict the imminent collapse of the dollar. What might really happen?

Tuesday, March 17, 2009
Desmond Lachman
WORLD'S RESERVE CURRENCY

Will the dollar continue to be the world’s primary reserve currency? What are the benefits and costs of issuing a global <a name="reserve" id="reserve"></a>reserve <a name="currency" id="currency"></a>currency?

Tuesday, December 1, 2009
McKinsey Global Institute

For decades the dollar has served as the world's main reserve currency, but, argues Barry Eichengreen, it will soon have to share that role. Here's why—and what it will mean for international markets and companies.

Tuesday, March 1, 2011
Barry Eichengreen

The currency most commonly held as a foreign exchange reserve is the U.S. dollar, which, according to the International Monetary Fund (IMF), comprised nearly 62% of allocated reserves as of late 2012.

Thursday, February 7, 2013
Investopedia
TRADE

This report is divided into four sections in a Q&amp;A format—trade concepts, US trade performance, formulation of US trade policy, and trade and investment issues.

Tuesday, March 27, 2007
CRS Report for Congress
QUANTITATIVE EASING

An assessment of the most controversial weapon in the central banker’s armory.

Saturday, July 14, 2012
Economist

Why quantitative easing might be appropriate, how it is supposed to work, and the <a name="fed" id="fed"></a>Fed’s exit strategy.

Wednesday, December 1, 2010
Alan Blinder
ZERO INTEREST RATE

The Federal Reserve took extraordinary actions in response to the financial crisis to help stabilize the U.S. economy and financial system. These actions included reducing the level of short-term interest rates to near zero.

Wednesday, December 31, 1969
Current FAQs

In the short run, monetary policy influences inflation and the economy-wide demand for goods and services--and, therefore, the demand for the employees who produce those goods and services--primarily through its influence on the financial conditions facing households and firms.

Wednesday, December 31, 1969
Current FAQs

What began as an emergency measure to support the entire financial system in late 2008 has seemingly become permanent policy at the Fed.

Monday, April 30, 2012
David Shulman

The current economic environment of low—virtually zero—interest rates has hit savers hard, but the US Federal Reserve’s accommodative monetary policy is actually having a stabilizing effect on the economy. Abruptly raising interest rates could harm economic growth and the housing market.

Sunday, February 12, 2012
John Makin
GOLD STANDARD

The U.S. could return to a gold standard, a system that would not only prevent the government from running chronic budget deficits but would also curb attempts to manipulate the value of the dollar for political reasons.

Friday, May 7, 2010
Sean Fieler and Jeffrey Bell

The gold standard prevents the central bank from fighting recessions by outsourcing monetary policy decisions to how much gold we have -- which, in turn, depends on our trade balance and on how much of the shiny rock we can dig up.

Sunday, August 26, 2012
Matthew O’Brien

The world is moving step by step towards a de facto Gold Standard, without any meetings of G20 leaders to announce the idea or bless the project.

Thursday, January 17, 2013
Ambrose Evans-Pritchard
IN THE NEWS

U.S. Treasury secretary nominee Jack Lew said he will maintain the strong-dollar policy if he is confirmed.

Wednesday, February 13, 2013
Ian Katz and Kevin Costelloe

In a concerted move to quiet fears of a so-called currency war, finance officials from the world’s largest industrial and emerging economies expressed their commitment on Saturday to ‘market-determined exchange rate systems and exchange rate flexibility.’

Saturday, February 16, 2013
David Herszenhorn

Seven top industrial nations, including the United States and Germany, pledged on Tuesday to let foreign exchange markets determine the value of their currencies.

Tuesday, February 12, 2013
James Kanter and Annie Lowrey