[Orangedog]

...Only in Europe

It's not just Europe. In the past two yearsthe US dollar has dropped ~20% against the Canadian dollar and over 10% against the Yen. As far as that being good for US made goods, the drops in the dollar over the past two years has not stopped the loss in the number US manufactured goods. We do produce a hell of a lot of grain, but that has been more than offset by manufactureres closing up shop in the US and moving that capacity out of the country. All a weakening dollar is going to do is increase prices for consumers in the US. It may help the agricultural sector, but it's not going to spur demand for US manufactured goods because the US is not a friendly environment for manufactureres.

[Southack]

"All a weakening dollar is going to do is increase prices for consumers in the US."

The Dollar has dropped more than 20% against the Euro and other currencies in the last few months, yet we haven't seen U.S. prices of homes and cars and aircraft and boats and clothes go up 20% in those same few months.

Why not?

Well, for starters, the U.S. Dollar has only dropped in value against other foreign currencies, not against itself (i.e. inflation).

Going on a European vacation might cost you a bit more right now, but vacationing in the U.S. still costs about the same, for instance.

Likewise, oil exporters, who get paid for their oil in U.S. Dollars, can still buy the same amount of American goods, services, stocks, and bonds...at least, they can do so inside America herself.

Their Dollars are still just as good here as before since inflation hasn't set in.

And why hasn't inflation set in? Higher productivity here in the U.S., for one thing. For another thing, the foreign exchange value of the Dollar is only a very small part of the overall economic equation. Imports are only 9% of our economy, for example, and they are offset by about 6% of our GDP that comprises our own exports.

And the difference between our imports and exports, what people call our trade imbalance, is the percentage of our GDP that is affected by fluctuations in the foreign exchange value of our Dollar...and that 3+% of our annual GDP is the small piece of the pie compared to the 97% of the rest of our economy.

In short, the foreign exchange drop in the value of the Dollar affects only a minor portion of our economy (and that impact is positive for our manufacturers, btw).

Sadly, there are others (not you) who either deliberately or ignorantly confuse "inflation" with the entirely different thing known as foreign "Exchange Value" as if they were one in the same...as if whenever the Dollar drops in foreign exchange value that you would get the same amount of domestic inflation here. Some of those people are even degreed economists.

But anyone who can see that we haven't had 20% inflation even though the Dollar has dropped 20% against the Euro...will surely see through such confusion.