Also, when the currency weakens, the business climate improves, a strong economy making a stronger paycheck. Later, the only thing that appears lower, is the debts you owe.
Again, I don’t want to totally dismiss the risk/threats of a weak currency, but they should not be overstated either. Frankly, a very strong, unusually strong currency is far more dangerous. See Japan as an example of that, and give it time, China will make Japan look like a very healthy robust economy...
What is so hard to understand here. You have $100,000 in the bank. You spent many years saving it. The dollar tanks and in a couple of years your savings only buys $50,000 worth of stuff. If things get really bad then it can be anything down to near Zero. It does not matter what people get paid. This is money that took years to save. To top it off the fed lowers, and the bank pays no interest on money that is already losing value. It is not good for anyone who played the game in an honest way. And yes you might be able to pay off your debt easier- If you still have a job under those conditions. But you will not be able to charge anymore because credit will dry up- and even if you could then the new prices of things will be out of reach for you. But anyone with savings invested in USD will see the value of there savings destroyed. Why? So that those with Credit can get a free lunch?
“Frankly, a very strong, unusually strong currency is far more dangerous.”
I’ve been lurking on these economics threads for a while, and I’d like to know whether you’ve read the recent Telegraph posting by Ambrose Evans-Pritchard, and if so, what do you make of it?
http://www.freerepublic.com/focus/f-news/1930009/
I’ve wondered why we tend to look at the situation almost exclusively as a collapse of the dollar, when it can also be seen as a euro bubble. When I compare some prices between goods in the U.S. in dollars, and similar goods in Europe in terms of dollars converted into euros it seems obvious that there is a significant disparity.