correct me if I'm wrong, here, please...

but I feel like this whole currency debate has boiled down to memes and knee-jerk reactions.  Me Caveman.  Me Like Strength.  Me Want Strong Dollar.

The NYT posted 2 articles in the past 2 days (links below) talking about the falling dollar...and they  mention that a falling dollar vis a vis the world's other currencies means our exports get cheaper.  This does NOT mean (unlike inflation) that milk will double in price.  It means that foreign goods will go up in price.  For those of us not buying any high-end electronics or new foreign cars or italian suits, it's not such a bad thing.  Meanwhile, we may save a few manufacturing jobs.  The dollar means something different to the rest of the world, but means exactly the same for us.

Currency exchange rates are only truly scary if there are severe changes over short periods of time.  Otherwise, they're supposed to reflect t he relative efficiency of our economies.  So if the europeans get relatively better at making widgets, the euro will become (relatively) cheaper than dollars (ie, it takes less euros to make the same thing).  And since when is getting more efficient a bad thing??

One of the problems is that china likes to manipulate its currency so that it always remains artificially cheap.  So it will always look like it offers bargain basement prices compared to the rest of the world. I'm sure everyone remembers that Thailand did the same thing.  And we remember what happened 10 years ago, right? <shudder>  You can't keep that stuff up forever.  Eventually, you run out of foreign reserves and everything goes bust.

So maybe we ought to quit worrying about the US dollar vis a vis [insert world currency x] and concentrate on getting China off of it's unseemly currency habits??

But I'm no macroeconomic/monetary policy expert.  I'd be interested to hear what folks have to say!

 http://www.nytimes.com/2009/10/20/business/economy/20fed.html?ref=business

http://www.nytimes.com/2009/10/19/business/global/19dollar.html?ref=business