Is the lowering in value of the dollar relative to other currencies bad?
As the dollar declines in value relative to other currencies, U.S. goods become cheaper. This allows U.S. manufacturers and producers to be more competitive in selling their products internationally while still receiving the same dollar profits. At the same time, goods imported into the U.S. become more expensive to consumers. Over time, exports should increase and imports decline. The large negative trade imbalance we have been running should also decline. On the positive side, this trend should encourage U.S. production growth and increase the number of U.S. jobs. Traveling abroad will be more expensive, as it will take more dollars to purchase the same number of goods or services. The biggest risk of a long term decline in the dollar are its implications to Federal spending. During the Bush administration, the Federal government has greatly increased expenditures while lowering tax rates. This has forced the government to borrow more and more to make up the difference. Much of our d
