Thursday, March 1, 2012

America's Disappearing Money

In class this week, we've been talking a lot about injections and leakages in our economy. One very notable leakage is our involvement in the global market.

As a company, spending money anywhere but America would be considered a leakage to our economy-exactly what we don't want. We want as much money circulating in our economy as possible so as to ease ourselves out of our economic recession. That seemed to work during/after WWII, when the world relied on us to provide materials and goods for them. Our citizens were employed and working diligently in every industrial area. America was gleaming with pride, or so the old people tell me.

Today it is difficult to simply single out and describe/predict the goings-on of America's economy, for we are overwhelmingly involved in the global economy. Countries trade and rely on each other, and consequently feel the repercussions of such through the strengthening and weakening of their currencies. This article says that since the 80's, the U.S. dollar has weakened by approximately 20%. This is actually good. A weak dollar makes for a high demand for our goods on the international market.

Bob McTeer, the author of the above article says that our weak dollar will help aid us in recovering from this recession. On the flip side, a strong currency would be beneficial so as to "support our rising standard of living". So, we would preferably want a weak currency now, and a strong one once we recover again.


Brayden said...

Darcy, you bring up very many valid points. I did not know that our dollar has weakened by approximately 20%! But my question to you is how can we, the United States of America, recover when our dollar is so weak? How can it magically become strong, putting us on the road to full recovery, if we keep trading internationally?

Darcy said...

Well actually Brayden, it would be ideal for our currency to stay weak right now. Our weak dollar is attractive to foreign investors, because its cheaper than buying goods from countries with strong currencies. So for now, its best that our dollar stays weal. When we reach our peak again, that's when it would be prime for our dollar to become strong again.