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In today's world we probably cannot have both manufacturing and a strong dollar

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Kurt_and_Hunter Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Dec-06-09 11:44 AM
Original message
In today's world we probably cannot have both manufacturing and a strong dollar
Edited on Sun Dec-06-09 11:59 AM by Kurt_and_Hunter
Nobody wants a "weak" dollar. it sounds, well... kind of weak.

But a strong dollar restrains domestic manufacturing by making imports cheap and exports expensive.

There are many complexities, of course, and they may swamp the significance of import-export issues. We borrow a lot of money, oil is (for the time being) dollar-denominated, etc..

So I am not arguing for a weak dollar, but rather seeing what DUers think. It's a major element of national policy but usually discussed only in financial circles.

How strong should the dollar be?

Discuss.
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kenny blankenship Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Dec-06-09 11:46 AM
Response to Original message
1. Or "Free Trade"
Edited on Sun Dec-06-09 11:47 AM by kenny blankenship
"Today's world" of global manufacture didn't just happen, it is the result of deliberate acts of erasing and rewriting law.
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Ozymanithrax Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Dec-06-09 11:49 AM
Response to Original message
2. Why can Germany exist with a Strong Mark?
Not all countires are slave to creating a system where their currancy is kept weak on purpose.

If they can do it so can we.
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TheBigotBasher Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Dec-06-09 11:56 AM
Response to Reply #2
7. It does not.
Germany like almost every EU Country uses the Euro. It is strong only in relative position to the weak $.

Germany however has also had the advantage of not saddling its businesses with health care costs, the Government there does its job, costs are met out of general taxation, nor does it have to pick up the cost of Neo Con stupidity.
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MannyGoldstein Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Dec-06-09 11:56 AM
Response to Reply #2
8. Because They Have High Tarriffs Aginst Microwage Nations
Edited on Sun Dec-06-09 11:58 AM by MannyGoldstein
Like we had before Clinton and Summers removed them.

This is the only thing that works, otherwise blue collar jobs and the middle class are destroyed.

Note: Germany is the number one net exporter in the world - greater than China and the US. And the middle class does fine there.
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mkultra Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Dec-06-09 11:49 AM
Response to Original message
3. this logic fails
the problem with your dynamic is that you have forgotten about sectors. The US dollar can be strong along with strong domestic manufacturing. The fact that a low US dollar boosts domestic manufacturing is why this sector leads the way in recovery. The goods that we import are NOT the goods that we export. We export mostly high quality high cost luxury, specialty, and heavy industry stuff. We import mostly retail. SO, a strong dollar is a good thing.
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existentialist Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Dec-06-09 11:51 AM
Response to Original message
4. a weak dollar
A weaker dollar would:

1. encourage domestic production and discourage imports.

2. increase the cost of borrowing, particularly from abroad.

3. be a realistic and probably inevitable adjustment to international economic reality.
If this third point is correct, then the sooner such economic adjustment comes--and arguably it should have come 25 years ago-- the less turmoil there will be with the adjustment.
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rfranklin Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Dec-06-09 11:54 AM
Response to Reply #4
6. If we can get wages down to third world levels...
then we can compete with China in manufacturing. Is that what we want?
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MannyGoldstein Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Dec-06-09 12:09 PM
Response to Reply #6
9. Well... We're Rapidly Moving In That Direction
But all we really need to do is to restore tarriffs on goods from microwage nations.
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abelenkpe Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Dec-06-09 11:54 AM
Response to Original message
5. There are plenty of examples
of businesses that manufacture things in the US competing with industries across the globe that pay excellent wages and have good benefits. (See Micheal Moores latest film) Big business would like to convince you that is not possible because it is not possible for them to continue to undermine workers rights and pocketing huge CEO pay if they don't use the specter of potential outsourcing or offshoring to convince US workers and consumers to accept less.

The dollar is weak and will get weaker if we have nothing tangible to back it up if our economy is based soley on the dead FIRE economy. Rebuilding our manufacturing base will help shore up the value of the dollar not the other way around. Rebuilding our infrastructure and pursuing green technology that helps us become less dependent on foreign oil would also help in the long run.

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AllentownJake Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Dec-06-09 12:19 PM
Response to Original message
10. Tariffs and Fair Trade Agreements
The amazing thing is with those you can have both.

If you tax the hell out of an imported product that the manufacturing company uses slave labor and pollutes the environment.
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