How many times has this stoopid piece from the left wing Economist been posted?
You keep the strong dollar. America will keep the weak dollar. OK?
We need to spend less, save more, and buy more from America. Doing so would be a major change. Doing so during a war might be close to impossible.
We are not responsible for the budget defecit, foreigners are. If they don't want to buy US goods and services that are exported, they have 3 choices: sell the dollars on the currency exchange market, buy dollar-denominated assets (stocks, bonds, real estate), use dollars to buy others' goods like oil.
The exchange rate reflects the world demand for paper dollars and for dollar-denominated assets.
A devaluation of a currency for a country like Argentina or Brazil is disasterious, but not for the US economy. The difference is that the dollar is the reserve currency and the peso is not.
When the Argentine government needs/wants to run a defecit, it has to go on the world market and get a loan denominated in dollars or some other currency. The only way it can pay off debt is by exporting goods and getting hard currency. It can't print money and pay its debt.
We could pay off the national debt tommorrow by simply printing money.
But in the internet age, it may only take a few months.
When interest rates and higher prices driven by the currency differentials skyrocket, the show will largely be over.
In the next recession, the Fed will not be able to lower interest rates to keep the economy going, because of the weak dollar. Rates will have to rise, no matter what Greenspan says, just to finance the national debt.