This is a very interesting article that I hope you will take the time to read. It will detail for you why our currently weak dollar will work against us as Americans and why a strong dollar will enable us to come out of the doldrums we are currently experiencing.
That being said, the process to strengthen the dollar is not an easy or pleasant one. It will involve pain and though the American people can deal with pain, they rarely let politicians keep their jobs when they experience it. Therein lies the dilemma.
The availability of cheap money, like the ridiculously cheap money that Americans have access to now and have become accustomed to, is a result of extremely low interest rates. Cheap money doesn’t just mean low interest rates, it also means low value. There are a number of methods to raise the value of the dollar, but the primary method available for use by the Federal Reserve is raising interest rates.
Raising the interest rates in a slow or stagnant economy can have deleterious effects on both the economy itself, and on the mood of investors in the stock market. Raising interest rates tends to slow economic growth because companies and individuals aren’t able to borrow money to make their money stretch. Companies and individuals can’t borrow money to make capital investments or buy gadgets without having to give up making more capital investments or gadget buying in the future.
This is why the economy and the stock markets don’t like to see the Federal Reserve raise interest rates. They fear that it will exacerbate an already delicate recovery, and that’s why money was made ‘cheap’ beginning as early as 2001 and remains ‘cheap’ to this day.
Money was made cheap during the recession of 2001 and the subsequent distress on markets after the attacks of September 11th. We as a country never grew up and weaned ourselves from this cheap money; and as such we have come to rely on its utility in our economy.
Until such time as we are willing as a country to accept some economic pain or until such time as the Fed is forced to raise interest rates or risk economic collapse; dollar weakness and its harmful effects will have reign on our economy.
–the civil commentator