Despite all the apocalyptic nay saying by right wing economists that the falling dollar is a bad thing, its actually a really great development for Economic Recovery:
From Nobel Prize winning economist Paul Krugman:
The truth is that the falling dollar is good news. For one thing, it's mainly the result of rising confidence: the dollar rose at the height of the financial crisis as panicked investors sought safe haven in America, and it's falling again now that the fear is subsiding. And a lower dollar is good for U.S. exporters, helping us make the transition away from huge trade deficits to a more sustainable international position.
But if you get your opinions from, say, The Wall Street Journal's editorial page, you're told that the falling dollar is a terrible thing, a sign that the world is losing faith in America (and especially, of course, in President Obama). Something, you believe, must be done to stop the dollar's slide.
A weak dollar is good because it means that its cheaper for foreign countries to buy American products .Indeed, the falling dollar is helping put workers back to work in the U.S. As an article in today's New York Times points out:
Mr. Stevenson's family-owned company, Eastman Machine, has been making cutting tools for the textile industry for 120 years. A year ago, in the depths of the financial crisis, Mr. Stevenson had to lay off a dozen workers, but the dollar's almost 20 percent decline since March has made his goods much more competitive overseas. Next month, Mr. Stevenson hopes to sign a multimillion-dollar deal in Europe that could enable him to rehire his workers.
"This wouldn't have happened five years ago, or even two years ago," he said. "Business conditions are still slow but the dollar has allowed us to be much more aggressive overseas."
So why does a weak dollar get such a bad rap in the media? Part of it has to do with messaging. Last week, Ezra Klein brought up a good point:
When people hear "weak" dollar, they think something bad is being done to the United States. It's terribly hard for a politician to advocate a "weak dollar" policy. It sounds like you're throwing Osama bin-Laden a birthday party.
So how do we get around these barriers? One reason why right winger economists are able to so easily manipulate the debates in the big multinational's interest is that messaging and labels on this subject are just so tough for most people to understand.
What is "free trade"? What is "fair trade"? "Weak dollar" policy? "Strong dollar" policy?
Most people don't know so conservatives can easily come in and label something as fair trade that isn't necessarily good for anyone. What are some ideas that people have on this issue? How can we overcome the barriers that make it tough to advocate for policies that build a sustainable economy both in the U.S. and abroad?