Friday, November 26, 2004

Dollar Depreciation

This article in the Times gives a nice rundown of the dollar situation. There is also an op-ed piece today which gives the reasons why a dollar depreciation, one which is well-managed and gradual, would be a good thing. I tend to agree...whatever happened to "beggar-thy-neighbor?" It used to be that depreciations were exactly what countries wanted since it increased exports and thus income. But now it seems that all the talk is about a "strong dollar." Bring on the weak dollar, if it means that jobs lost in the past four years will return. With monetary policy fairly ineffective in stimulation (except for stimulating a nice housing bubble) of the economy and fiscal policy tied up in suboptimal tax cuts, perhaps a depreciation of the dollar is exactly what the economy needs at this point.

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