Well, yes, except a falling dollar would need ever increasing interest rates to make it attractive.
It's just butt-ugly all 'round, if'n you ask me.
falling dollar would need ever increasing interest rates to make it attractive.
Not quite. A falling dollar might require higher interest rates to make government bonds look more attractive. But, emphasis on "might," too -- safe money is better than no money. The US has never defaulted on loans, nor does it appear likely to.
On the flip side, a falling dollar makes US-produced goods and services more attractive without any other assistance. With a strong enough economy, enough money moves into the government to balance accounts -- and the country was steadily moving toward a balanced budget prior to the recent economic jostling.
Now, there's no question the real estate market will have an effect, but the housing market has been slowing for almost 18 months already. I'm more optimistic than wetkarma about the potential for a post-shock recovery. because the country has already successfully dealt with hits to other sectors in prior years, and because the Fed is not staffed by idiots. While it may not be the "soft landing" financial analysts had been hoping for, it might be close enough.
a falling dollar makes US-produced goods and services more attractive without any other assistance
Well, yeah, except for the minor detail that we don't manufacture anything here anymore!
Intervention in the economy through interest rate adjustments or tweaking the money supply has always been a mug's game. In the end it always pays to look at the largest issues and how they affect the economy.
Large Issue #1: Americans spend more than they make. Trying to incite more consumer spending, as the fed suggested we should do, may not be the solution there.
Large Issue #2: We're spending billions every month on a war that by definition will never end. Regardless of whether you think this war is justified or not, this kind of spending is antithetical to any real economic growth.
Bottom line is that the $US is not an attractive investment. And as long as that fact remains, it'll be a while before we see the bottom of this well.
except for the minor detail that we don't manufacture anything here anymore
Where did you get that idea? The US manufactures more today than ever before.
That was hyperbole, zyx.
A reference to the continuing outsourcing of manufacturing and the ever-decreasing number of jobs in that sector. Fewer and fewer Americans benefit from indigenous manufacturing, and the few who benefit tend to be...you guessed it, the most wealthy.
In 1945, approximately 35 million Americans worked in manufacturing. Today it's about 30 million - a loss of 5...million...jobs. And the Bureau of Labor Statistics predicts that jobs in manufacturing will continue to decrease through 2014 as companies turn to increased automation...and move factories to countries with lower labor costs.
Fewer and fewer Americans benefit from indigenous manufacturing...
That's only correct if you think that the only people who benefit from manufacturing are the people who are directly doing the manufacturing, and that's an extremely shortsighted view.
...and the few who benefit tend to be...you guessed it, the most wealthy
That's absurd. The average* American today is far better off than he was when manufacturing employment was at its peak.
We, as Americans, should be grateful that so few Americans can be employed in manufacturing yet produce so much. The manufacturing of old, when there were so many more jobs in manufacturing, was labor-intensive (and I mean the term here not in the macroeconomic sense, but in the sense that factory work was debilitating, exhaustive, dangerous, and dirty) and the workers had little to offer but themselves as inefficient, expendable machines made of meat. Being expendable, those workers weren't worth very much, and therefore weren't paid very much. Contrast that with the situation today when American manufacturing workers are far and away the most efficient in the world, add tremendous value to their work because they are ever increasingly applying knowledge and problem-solving to their tasks rather than mere repetitive physical labor, and are, accordingly, very well paid.
Who benefits from the tremendous efficiency of the US manufacturing sector? We all do, not only the rich. We benefit for a host of reasons, such as the fact that food, for example, is far cheaper today than it was when it took so much more effort to produce. We all benefit because the service economy is a far more pleasant place in which to be employed - jobs that do things for other people are, on the whole, far better paid than jobs that make things for other people.
In 1945, approximately 35 million Americans worked in manufacturing. Today it's about 30 million - a loss of 5...million...jobs
It's a loss of 5 million debilitating, exhaustive, dangerous, dirty jobs that no one misses. (Though the figures you mentioned, 35 million and 30 million, are not only wrong, they are
wildly wrong.) And those losses were not only a good thing from a human welfare standpoint, but were absolutely necessary for the US to become the global economic powerhouse that it is today.
The fact of the matter is that, as I mentioned above, the US economy manufactures far more today than it did in 1945. It does that with far fewer workers than it needed previously. Suppose that US manufacturing employment were as large today, as a fraction of the total workforce, as it was in 1945. Suppose further that those workers were as efficient as workers are today. In order for those two things to be true, manufacturing output would be larger than the entire economy. Since that would be impossible (there has always been a large service sector in the modern US economy, you know) the only way for manufacturing employment to be that high today would be for the efficiency of individual workers to be far lower, and that means that their value and pay would be correspondingly lower.
...the Bureau of Labor Statistics predicts that jobs in manufacturing will continue to decrease through 2014 as companies turn to increased automation...and move factories to countries with lower labor costs
Good, good! That's excellent news. The jobs that will be moved will necessarily be the ones that cannot profitably be done with American workers. The remaining domestic manufacturing production will be the best, highest-paying, most knowledge-intensive manufacturing that the US has.
* Don't read anything into my use of the term "average" and think it was misapplied or used in the strict statistical sense of the "mean." All you have to do is look at the median income when manufacturing employment was at its apex (whether in absolute numbers or as a percentage of the total workforce) and compare it to the median income today to see that increased manufacturing employment is not a desirable goal.
The average* American today is far better off than he was when manufacturing employment was at its peak.
The average wealthy person, you mean.
American manufacturing workers are...very well paid.
Yet still losing their benefits, which marginally higher wages cannot compensate for.
The jobs that will be moved will necessarily be the ones that cannot profitably be done with American workers.
They always could be done profitably, just not AS profitably.
At a certain point, manufacturers have to decide what is more important: a few cents more profit every quarter, or a healthy and productive lower class.
Again it seems you are wrong on all counts.
Some facts:
- Median household income is significantly higher today than when manufacturing employment was at its peak. That means everyone is doing better, not only the wealthy.
- Average total compensation is up, even for manufacturing workers who are "losing their benefits."
- There is a limit to how long a certain type of firm can remain profitable while still keeping their production in the US. There is no way to avoid the fact that, for example, the Chinese are more economically efficient at producing certain goods.< When a firm becomes unprofitable, or only marginally profitable, it should go out of business.
I have no idea what you mean by "a healthy and productive lower class." What do you mean by "lower class"? Are they healthy and productive now? Do you have any reason to believe that they will not continue to be as healthy or productive in the future?
