“A strong dollar is a good thing,
right?”
“Yes, sure.”
“Wrong. But I think that you meant to agree with the
statement, ‘a strong dollar is good for America, good for Americans,’ right?”
“Yes, exactly, that is
what I meant to agree with.”
“Well, wrong there too.”
“A strong dollar is not
good for us? It is only common sense
that a strong dollar will benefit Americans, so why not?”
“Well, a strong dollar
benefits some Americans and it burdens other Americans. For
example, a strong dollar encourages American travel overseas, as our dollar
will go farther than normal. So, it also
benefits the travel industry that specializes in foreign travel. But it hurts American tourism as now our
tourism is more expensive for foreigners.
In addition, a strong dollar benefits firms that import foreign
merchandise as these items are now less expensive. But it hurts exporting companies who sell
American products that are now more expensive overseas than normal. A strong dollar benefits retailers like Walmart
that sell cheap foreign-made products, now even cheaper, and if those cost
benefits are passed onto consumers it benefits them, too. On the other hand, it hurts companies that
manufacture goods for a foreign market and it also hurts workers that are employed
by these companies. In short, a strong
dollar benefits foreign tourism, exporting companies, and consumers, while it
hurts American tourism, importing companies, and workers. And it hurts individual workers more than it benefits
individual consumers, because there are fewer workers to absorb the loss. One last thing: as a strong dollar sends
dollars overseas, a strong dollar is more likely to induce a recession than a
weak dollar. OK, get it?”
“Ouch, that is
complicated.”
“Yeah, but it is common
sense, once you really think about it.”
“I guess so.”
