Tuesday, May 3, 2011

Weak Dollar

In order to stave off an impending recession shortly after September 11, 2001 the Bush administration implemented a weak dollar policy. The plan was to boost consumer confidence, encourage exports, and stimulate the economy.
Although exports did get a positive bump the jobs went overseas as well as the products, the economy stagnated, and consumers were not yet ready to spend. This policy has been around since before the hunt for bin Laden began. It's time for a change.
Several mistakes made during those Bush years compounded the problem and the bursting housing bubble dragged us further towards recession. Bailouts and Stimulus under President Obama have yet to yield solid results, and he seems to favor a weak dollar policy despite Treasury Secretary Geithner's claims to the contrary.
A weak dollar policy is a tax on US consumers. The strategy was to keep interest rates low so manufacturers who sold to overseas markets would have a competetive edge, make higher profits, thereby enabling them to hire more employees. That stategy did raise corporate incomes but they did not increase their American worker numbers. In fact in the last ten years US corporate multinationals fired 2.5 million employees and increased their overseas work force by nearly the same number. The value of the dollar has diminished by 31% since 2001 therefore the price of commodities (gold, oil, food) have skyrocketed.
If you do not consume chemicals, plastic, oil or food you are exempt from this unfair tax.
The Federal Reserve continues to print money and keep interest rates low, this must change.