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Strategies & Market Trends : ahhaha's ahs -- Ignore unavailable to you. Want to Upgrade?

To: Ilaine who wrote (1707)	4/5/2001 6:39:13 PM
From: Ish	Respond to of 24758

<<Here is my question - why does the United States want to keep the dollar "strong"? >> A triple edged question. 1. It hurts farmers and exports, that's the downside. 2. It makes import cheaper, ie your Sony TV. 3. It causes foreign investment in the US economy to protect the capital of people who have weakening currencies.

To: Ilaine who wrote (1707)	4/5/2001 10:16:16 PM
From: ahhaha	Read Replies (1) \| Respond to of 24758

why does the United States want to keep the dollar "strong"? We'd inflate like crazy otherwise because demand would switch to domestic sources giving all those loving, caring, Americans a chance to get there's by raising their compensation faster than they add value. We have the worst balance of trade that we've ever had. Worst relative to what? We give foreigners paper and they give us goods. Seems very virtuous I'd say. Wealth always flows in the direction of the low cost producer. The Asians are willing to work harder for less, so they get the action. We're too fat to compete and to do so would be against the official doctrine of nationalism socialism reigning here. Is it helpful to Japan? It was when Japan had cheap labor. Now they don't. Other Asia does. The situation with Japan has evolved to a point where they think they must rely on the mechanism of neo-mercantilism. Japan fails because they wish to keep the export orientation of their industries, but to do so, they have to be the middleman in an Asian transaction. Labor is the modern gold relative to the 17th century mercantilist process. Japan knows how to stimulate their economy. It's very simple. All they have to do is to create currency. This would cause domestic demand to rise and with it interest rates would rise. This would strengthen the yen and cool the export market. Rates wouldn't rise so much to cause problems and the BOJ can control that easily, it's just that they don't want to give up what they consider to be the advantage of neo-mercantilism. The powers that be know the country would have to go through a lot of suffering, they think, in order to make a transition to a "balanced" economy and renounce neo-mercantilism. They'll have to do it sooner or later. Is that why? No. We could care less about Japan and we shouldn't care less. That's none of our business. Can you see how we should be neutral?