Strong Dollar Talk, Weak Dollar Walk
A strong dollar is good for the U.S. Or is it a weak dollar?
Whenever he’s asked, Treasury Secretary Henry Paulson chants the administration mantra that a strong dollar is in the national interest. He even reminded his fellow finance ministers of that view during a closed-door meeting of the Group of Seven major industrialized nations in Tokyo last weekend. The Europeans welcomed the reaffirmation; their exporters have been taking a beating with the euro worth around $1.45.
But today, the White House released the Economic Report of the President, with an entire chapter celebrating the boom in U.S. exports – a bright spot in the otherwise gloomy economic outlook. And what did the president cite as one of the reasons American companies are doing so well abroad? “Changes in exchange rates.” By which, of course, he meant the weak dollar.
Asked to explain the inconsistency, White House economic adviser Edward Lazear told reporters that he’s not allowed to comment on dollar policy. That job falls to Paulson and the president. But, Lazear observed, “if you look back at the exchange rate in 2001 and compare it to the exchange rate today, they are different. What that implies, of course, is that American goods have become cheaper, and that imported goods have become more expensive over time. That’s a fact, not a policy statement.”
The truth, apparently, is that while Paulson knows he has to chant the chant to avoid pushing the dollar over a cliff, the Bush administration is not-so-secretly glad to see the weak greenback doing its part to stave off a recession. – Michael M. Phillips
WSJ
* A 2007 report on IMF financing suggested selling about 10% of the gold, and that still hasn’t been accepted. |
