I am not being a skeptic here. I am not painting a picture of doom. I am going one above what the President and his economic advisors say. I am also following the trend of the Dollar which has sunk to 15 month lows amidst a cloud of economic good news.

Basically, I am basing this on the President’s wish to boost exports and cut the trade deficit. I think that this could be good and this could spell jobs in the short and the middle term. However, are we really ready to get things coming from Tennessee rather than Tokyo or, Boston rather than Beijing?

To make things exportable, we need to have the top technology or the bottom price. So while we have certain rights and America dominates in sectors that requires technology such as bio-technology, medicine and green technology, many of these are easily copied overseas and they would compete with us in that field.

E.g. We created drugs that slow down AIDS, India created the same drug at 1/10th the cost. We were pioneers of green technology, yet America is not the biggest producers China is. In the same way, we have been overtaken by the Singaporeans and the South Koreans in the production of bio-medical industries. So that is a problem with these sectors contributing to the export numbers.

So to export more things, we got to make our production cheaper. To do that, we got to increase productivity dramatically which is very unlikely; Or we got to weaken our currency. That is more likely to happen.

First lets see the cons of having a weaker currency. We would see inflation increase. Expect to see oil and gold prices rising. Things would be more expensive and the bite may be painful when it happens. It would most likely drag over sometime, which would be unpopular with the populace as they would feel the pinch and would cause the ruling party to lose elections. It would also make imports more expensive. Again, something that would not be popular with the American population.

Another impact could be coming from immigration. A weaker dollar could shun immigration. While this may be music to former Representative Tom Tancreado’s ears , it is actually not a great thing. A lot of talent in America today comes from overseas. India and Eastern Europe give us a lot of IT professionals. Asians dominate sciences in our country. So this could be a commonly neglected aspect of having a weaker dollar.

There are pros of having a weaker dollar too. First and foremost, it would make American labor cheaper. When American labor becomes cheaper, more investors would like to open their factories or places of production. That would lead to higher employment. More people get employed means more demand which would allow more people to set up shop here and the positive cycle carries on. So a weaker dollar means more jobs.

A weaker dollar would may also increase interest rates. This could be a good or bad measure. For one, with higher interest rates, we encourage savings and lending to start-ups. With a lower interest rate, we encourage spending. That I leave it up to the readers to decide.

So I wish to inform the readers, get ready for a weaker dollar. How are we going to do that? I think the readers should know better than we on that. I also hope that you share your ideas with us.

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