Germany passes US in exports
This little tidbit came out during the horror phase of Katrina so I just filed it away. Thought I'd bring it out now.
As an avowed "strong dollar" man, I would like to point out that the intentional weakening of the dollar has not substantially increased our exports, and has, in fact, substantially increased the cost of our imports. That, "lower the currency to increase the import/export ratio" Econ 101 theory doesn't really work when your trade gap is so huge. We have not rebalanced our trade with China, all we have done is increased the costs of our imports(including oil) which lowers the standard of living for the middle class and below.
As the Clinton policies demonstrated, a strong dollar draws in investments from the rest of the world, fleeing the insecure local currencies for the relatively stable dollar. This inflow of foreign capital draws in significant capital which is then invested in US businesses and assets. And this is a good thing, and should be a goal of monetary policy.
Beyond certain exporters, the only people who have really benefitted from the managed fall of the dollar are corporations who had been parking profits off shore, partly for tax reasons, who can now repatriate those profits at significantly lower tax rates thanks to Bush admin policies for significantly more US dollars. They're not by any means the only ones, but, as example, take a look at Halliburton and Bechtel.
Barely noticed, Germany has overtaken America to become the world's biggest single exporter, shipping the hardware that powers the rising economies of Asia and eastern Europe. Its trade surplus is now greater than that of China, Japan and India combined, reaching a staggering 16.8 billion euros in June alone. The profits made by German companies are running at over 33 per cent of national income, the highest in 40 years.
As an avowed "strong dollar" man, I would like to point out that the intentional weakening of the dollar has not substantially increased our exports, and has, in fact, substantially increased the cost of our imports. That, "lower the currency to increase the import/export ratio" Econ 101 theory doesn't really work when your trade gap is so huge. We have not rebalanced our trade with China, all we have done is increased the costs of our imports(including oil) which lowers the standard of living for the middle class and below.
As the Clinton policies demonstrated, a strong dollar draws in investments from the rest of the world, fleeing the insecure local currencies for the relatively stable dollar. This inflow of foreign capital draws in significant capital which is then invested in US businesses and assets. And this is a good thing, and should be a goal of monetary policy.
Beyond certain exporters, the only people who have really benefitted from the managed fall of the dollar are corporations who had been parking profits off shore, partly for tax reasons, who can now repatriate those profits at significantly lower tax rates thanks to Bush admin policies for significantly more US dollars. They're not by any means the only ones, but, as example, take a look at Halliburton and Bechtel.
posted by mikevotes at
1:56 PM
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