William Thien

Consumers and Currency Manipulators, Part II

Posted on: April 20, 2017

This morning I wrote to you to describe why policy that weakens the dollar is bad for the US consumer. Now I will explain why it is also probably not so good for producers when the dollar is weakened.

The cost of living in America is so much higher than it is in many other countries that it is unlikely except through enhanced production techniques and other methods such as more efficient distribution that American laborers will be able to produce goods at an equivalent cost of production to those goods manufactured elsewhere, where the cost of living is much lower, and as result so is the cost of labor.

If the dollar is weakened then one can only afford to purchase products produced elsewhere as Americans, due to the weakened dollar, their own currency, cannot afford to buy Made in America any longer. It’s too expensive.

So, if as the current administration has said after meeting with members of the country he branded “currency manipulators” and he did a complete 180 and deemed them not so, and then even followed that statement after the meeting with “the dollar is too strong,” (wow, this is getting really twisted, though I said this would happen) which he did, there is something unusual occurring that ultimately will not benefit either the US consumer or the US producer. Could it be sheer ignorance about monetary policy? Could it be some form of economic collusion between countries? Does it even matter to those of us that use dollars? If you have an unlimited income, no. If you are a working stiff, yes.

Why?

If you weaken my dollars and your dollars, which is what has been happening for an extended period of time now (Greenspan straight through to Yellen), then you make it much less likely for me to purchase products manufactured by Americans every chance I get. The American cost of living is too high and as a result so is the cost of production. Eventually, with more efforts to weaken the dollar the only consumer products I will be able to afford are those manufactured by “the currency manipulators.” Checked the label lately?

America is still the world’s largest consumer market and if you weaken the currency of the citizens of that market ultimately you will weaken that market as well. One follows the other.

If you want Americans to “Buy American” you have to make it possible for Americans to afford “Made in America.”

Right now many cannot.

Copyright © William Thien 2017

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