Ben, It's Time for a Stronger Dollar
I mentioned awhile ago that at some point that Bernanke was going to have to allow the dollar to stregthen by quitting the financial crisis money creation and low interest rate policies. We have bought time with cheap refinancing of debt and now that the Chinese are about done floating us cheap money, it is the time to allow the dollar to rise.
With Congress set to come to some budget cutting package, which will certainly have a lot of smoke and mirrors, but be a cutting package nonetheless, Bernanke has a chance to help Americans standard of living by allowing interest rates to float up and strengthen the dollar.
This country does not need cheap money to borrow. Low interest rates are unnecessary unless you are a banker looking for a bonus. We are awash in debt as it is. Allow the yield curve to normalize, it is time.
While some people who are invested in multi-nationals will scream and moan about a stronger dollar, the fact is that we are in a demographically driven downturn that IS going to last most of this decade at a minimum. No amount of dollar weakening is going to bring back manufacturing jobs. If it were, it would have already been noticable.
Also, no amount of cash creation is going to stimulate the economy in a healthy way. We could create anther debt bubble, but are we really that stupid and delusional??? We are much better off allowing the dollar to drift up against the Euro and Asian currencies, including the impending float sometime this decade of the Renminbi.
A stronger dollar improves the standard of living of 98% of Americans. The other 2%, yeah it hurts their portfolios a bit, but doesn't change their standard of living. It's time to bring back the strong dollar.
The only reason, and I mean only reason, to allow the dollar to continue to weaken over the intermediate term is if in fact the crooks are running the country. If they still are, then it's time for other more decisive actions.
While I am not a fan of the social slant of some right wingers or tea partiers, at least the tea partiers have a vague idea that a stronger dollar is a good thing. I don't like that they want to cut education and health care, I'd rather see the Bush tax cuts for the richest 1% disappear, military spending flatten and community service be required of long term welfare recipients who have no disability, but they have some notion that a stronger dollar is good for most of us.
With what little money we have in the short run to spend, it is time to actually rebuild our infrastructure and pound into solar technology in the south as solar is just about at grid parity with natural gas in places like California, New Mexico, Arizona, Texas and south eastern states. Those projects would do far more to stimulate American growth, which we need to approach 5% quick if we want to avoid a debt armageddon, than any devaluation program. With a stronger dollar we could afford the materials we need along with making food and energy cheaper for Americans.
It's time that the standard of living for 98% of us mattered more than the portfolios of 2% of us.
Ben, It's Time for a Strong Dollar