Wednesday, November 25, 2009

What Secret?

Saw this online ad the other day and had to laugh...



Secret war? What secret? The administration isn't fooling anyone. There are valid arguments for and against a strong or weak dollar policy. Washington pays lip service to a strong dollar policy because it appeals to the masses and because it benefits consumers - you know, the regular folks. Wall Street isn't at all shy about supporting a weak dollar. This policy, like all things, needs to find a balance. Presently balance is not being sought by the current regime in Washington. It wasn't being sought by the former regime either - but possibly for different reasons. I'll let you guess which reason suits Obama and which suited Bush.

Strong Dollar

***Advantages***
Lower prices on foreign goods & services for consumers
Helps keep inflation low
Cheaper for US citizens travel abroad
US investors can purchase foreign investments cheaper
***Disadvantages***
US companies' goods/services expensive to foreigners
Foreign tourists face higher price in US
Foreign investors find US investments expensive
More difficult for foreign investors to provide capital to U.S. in time of heavy U.S. borrowing

Weak Dollar

***Advantages***
US companies' goods/services cheaper to foreigners
Foreign travelers find US more affordable
US assets more attractive to foreign investors
***Disadvantages***
Higher prices for consumers on goods/services from outside US
Higher prices on foreign goods translates into higher inflation
Expensive for US residents to travel abroad
US investors find foreign investments expensive

Here's the question: Who is the real loser with a weaker dollar _________?

The answer can be found in the list.



CW

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