US Dollar "Rising Too Rapidly"

[Economy 52,879]

http://www.bloomberg.com/news/2014-09-30/dollar-near-110-yen-for-1st-time-since-2008-on-growth-divergence.html

 

Because Europe and Japan are still stagnating, and China has been rather slow as of late and the US is seen as the next major engine of growth for the world economy, the Dollar has been rallying against all 16 major currencies of the world... That being said most economists say the hype is being blown out of proportion and that the Dollar having rallied this much in such a short period of time isnt justified.

 

Also economists warn a currency rising too quickly can destroy a Countries productivity as imports become cheap and displace a Countries domestic manufacturing and make exports uncompetitive

[Luc 4,776]

Actually expected this to happen. Reason I won't be investing in dollars too soon this will slow down US growth I think.

[monsterdreams 1,529]

Well I don't really get any of this and I'm not American so I'll assume I'm OK

[Economy 52,879]

Actually expected this to happen. Reason I won't be investing in dollars too soon this will slow down US growth I think.

maybe not by much. Exports only make up 10% of the US economy. Trade isnt a major part of their economy, they are more domestic and produce more of their own things. Although a high dollar can be an issue for that too because domestic manufacturers have to compete with cheaper imports but its doesnt kill domestic manufacturers as much as it would exporters

 

Also exports and manufacturing growth already grew quite significantly in the last 2-3 years in the US. The major growth they were expecting now was in consumption secots of the economy such as housing, retail and the service sector

 

A high dollar will also lower gas prices and other costs further putting more money into the pockets of consumers... still though, industrial production will definitely be affected negatively by the high US Dollar

 

For a trade dependant Country like mine (Canada) a currency rising too quickly is detrimental. Our banks didnt collpase in 2008 like they did in many Countries and our economy was more stable so our currency surged in 2008... the result was our manufacturing base shrank a wooping 20% far more than most developed nations. We fully recovered our GDP in 2011 but we didnt hit pre-recession manufacturing till this year

Well I don't really get any of this and I'm not American so I'll assume I'm OK

the high US dollar basically makes it harder to sell products to other Countries, and it makes it cheaper to buy stuff from outside so domestic manufacturing can take a hit

 

basically this is good for consumption and bad for production

[Klou 2,414]

Freaking fast food workers rallying to raise their wages to $15 an hour doesn't help this situation.

[Economy 52,879]

Freaking fast food workers rallying to raise their wages to $15 an hour doesn't help this situation.

u mean in the sence of making the productive part of the economy such as manufacturing less competitive?

[Klou 2,414]

u mean in the sence of making the productive part of the economy such as manufacturing less competitive?

I apologize ahead of time because I'm horrible at economics, but I mean if fast food workers have their pay increased more than two-fold, then that would ultimately help lead to more inflation. Same goes with all these states trying to raise the minumum wage to ridiculous amounts.

[Economy 52,879]

I apologize ahead of time because I'm horrible at economics, but I mean if fast food workers have their pay increased more than two-fold, then that would ultimately help lead to more inflation. Same goes with all these states trying to raise the minumum wage to ridiculous amounts.

yes, but were talking about the US Dollar rising too much against other currencies in exchange rates potentially hurting manufacturing by making exports less competitive and making imports cheaper.

 

Inflation is a completely different issue

 

the only relevance high minimum wage might have to this is that it would also favour the consumption part of the economy while hurting the productive part of the economy by rising labor costs for producing companies. IT would create the same kind of harm a high currency would

 

but a high currency puts downward pressure on inflation while a higher minimum wage puts upward pressure. in terms of inflation the currency exchange rate and minimum wage there is no relevance whatsoever

[Klou 2,414]

yes, but were talking about the US Dollar rising too much against other currencies in exchange rates potentially hurting manufacturing by making exports less competitive and making imports cheaper.

 

Inflation is a completely different issue

 

the only relevance high minimum wage might have to this is that it would also favour the consumption part of the economy while hurting the productive part of the economy by rising labor costs for producing companies. IT would create the same kind of harm a high currency would

 

but a high currency puts downward pressure on inflation while a higher minimum wage puts upward pressure. in terms of inflation the currency exchange rate and minimum wage there is no relevance whatsoever

 

Okay thanks for explaining. My issue should have been a different thread then That whole topic just infuriates me so much... I can't.

 

I can imagine for countries outside the US how frustrating that rise would be!

[Economy 52,879]

Okay thanks for explaining. My issue should have been a different thread then That whole topic just infuriates me so much... I can't.

 

I can imagine for countries outside the US how frustrating that rise would be!

well there are currency wars but not to see who can have the highest currency

 

everyone wants a weaker currency to help exports and manufacturing

 

A high currency is good if ur economy is competitive enough because you can still export and be productive, AND get cheaper imports...

 

but since the whole world is uncompetitive these days it seems, no one can handle a high currency without their manufacturing getting shot it seems