New US Economy Policy Message Board

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Strategies & Market Trends : New US Economy Policy

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To: Arthur Tang who wrote (115)	2/17/1998 9:19:00 AM
From: Arthur Tang	of 435

What US currency did to the new economy? America is a net import country, because of higher labor cost. America has the highest standard of living in the world. America has been the technology leader of the world because of our high standard of living which requires all the labor saving devices and entertainment to enrich our lifes, on top of everything. The rest of the world when you visit them, you know they are still living in the past. Consumer demands are simply nonexistant or very scarce indeed. Self-sufficiency in America will insolate the currency effect around the world. Trade deficit lead many people to wish for strong currency to buy foreign goods cheap. But human nature tend to overbuy when the price is too attractive. Making trade deficit even worse; which is what is happening to us now. On the other hand, devaluating currency may improve exports but imports become too expensive. What surprises most people is that the surplus export may mean just changing local currency to foreign currency through product or service export. If you don't have balance trade you find that the local currency printed is devaluated to exchange for foreign currency by the exchange of cheap labor and cheap raw materials. Some raw materials are the national resources of value which may be depleted some day. When you through export receive too much of the foreign currency; your own currency will be too strong because it became backed by the foreign currency. Currency equivalence is really equal work for equal pay. An autoassembler in Asia should earn the same amount as workers in America, if the work content is the same. Raw materials will also be the same price even if you buy them in different currencies. If raw material can be replaced and labor can be replace in any currency then we have the proper currency exchange rates. The new economy is moving towards that by production automation, where labor work content is the same every where in the world.

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