Originally Posted by IcyPatriot
when those loopholes are closed Obama's people can then offer big breaks to companies doing business here and especially those companies producing things here. China won't be happy, nor will Japan or Mexico or the dominican Republic ... but too bad.
Guess what the horrible, terrible weak dollar does to demand for American goods and services? Makes them more attractive, of course.
Also of course, that's not what one wants to rely on to attract business. In a global economy, however, the historically wealthy working and middle classes are in competition with the historically poorer working and middle classes elsewhere.
Essentially, back when they invented the Euro, I believe it was worth a buck, just as a starting point, but not pegged to the dollar. Maybe my memory's wrong, but let's pretend that's the case.
So when a euro is worth a buck, and you have to pay 1000 Euros in taxes, labor costs, etc. etc. etc., to produce goods in say Germany, and 1000 dollars to produce the same goods here, and transport for said goods costs 100 dollars or euros, a company exports nothing and imports nothing. It uses its German plant for German goods, and its American plant for the American market. Otherwise it spends 1100 of either currency to sell the same goods by moving them elsewhere.
Now: fast forward to where a Euro = 1.5 bucks. Say you spend 1000 dollars and 1000 Euros on said costs, and transport costs 100 euros (150 bucks.)
That thing you made in Germany costs 1500 bucks, plus 150 bucks for transport. 1650 bucks. You can make it for 1000 bucks in America. Granted, costs adjust upward when the currency is worth less, but the gap still remains. A country with a weaker currency does not adjust all the way to the cost standards of a country with a stronger currency.
Badda bing, badda boom. Unless we all go down the toilet together, and at the same rate (we are all going down the toilet, indeed, but taking different routes to do so.)
Long story short, the weak dollar is good for jobs, but bad for inflation (think expensive rather than cheaper imported goods.)
You probably knew all that but it is worth getting out there. You want a big trade deficit? Have a strong dollar. You want a narrower trade deficity? Have a weak dollar, but you also get inflation.