Bit wrote the following yesterday while discussing the Canadian conservative upswing.
Oh, by the way, there’s been an awful lot of chatter, lately, as regards the Canadian dollar coming up somewhat higher than the American dollar just recently. Of course, the usual leftist mantra, pins this on President Bush. I suppose that’s part of it. But the part that they don’t seem to want to recognize, is that the other half of the reason is that there is a real conservative running Canada for the first time in decades.
I found this at one of my daily reads shortly thereafter:
The falling dollar: Bad news, or good news?
When the dollar rises, imports become more affordable to us, and the trade deficit tends to increase. When the dollar falls, exports tend to rise; that helps create jobs here, and boosts GDP. So, is a falling dollar bad news, or good news?
Here’s the latest version of the trade-weighted dollar chart; the dollar is almost back down to its
19871997 level. (Exports, by the way, are behaving as predicted: rising briskly.)
[Source: St. Louis Fed]
In the long run, a falling dollar is usually a precursor to higher inflation. So, in spite of the apparent short-run benefits, it would be better if the dollar leveled off, removing a measure of uncertainty. Financial maneuvers to avoid inflation or deflation distract resources from the task of real growth.
To get more economic common sense, visit The Skeptical Optimist.
Tags: BitsBlog, BO, Bush, Canada, Economics, Leftist, NFL, UN, W
