BobS
Back to topic, there has been way too much doom and gloom about the dollar’s fall and the dire effects thereof. There are certain push-back factors that swing into play when our currency falls that are beneficial. They are already serving to help us and will increasingly cushion our economy in 2008. Among them:
1. Our labor costs get increasingly competitive (see above).
2. Our tourism becomes a bargain–bringing foreigners here and deterring us from vacationing abroad.
3. Our industrial rust belt bounces back–the signs are already showing up if one digs deep enough.
4. US-made products become a better bargain to US consumers relative to foreign made, and no, we haven’t forgotten how to make everything.
A concept called “purchasing power parity” sums it all up–by asking what a basket of goods costs in each country in their currency. Also called the the Big Mac index. Surprise–the U.S. is a relative bargain. As the world slowly learns this, purchasing habits and investing trends will adjust, to our advantage.
