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How a Strong US Dollar Will affects our Daily Life

by Estalontech 2 months ago in history / stocks / personal finance / investing / fintech / economy / career / advice
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A strong dollar is not "such a dreadful thing," and I don't mean to imply otherwise.

Some sectors of society will benefit from a strong dollar, while others will bear the costs of maintaining a strong currency. The same holds true for a weak dollar, although the beneficiaries are likely to be different.

To put it another way, a strong dollar can help alleviate some issues while exacerbating others, and vice versa with a weak currency. When the dollar is strong versus other major currencies, for instance, U.S. consumers can enjoy lower-than-usual pricing on imported goods. In a similar spirit, we can visit foreign nations and keep our standard of living low. I think this is the type of perk you have in mind when you pose the query.

However, it may be argued that the way you posed your question obscures the argument you were making.

Everyone agrees that the United States economy is "Consumer centric," citing the fact that private consumption constitutes about 80% of GDP as proof.

That's true…to an extent. Imagine that all humans, whether they are Americans, Indians, or some other race, can be neatly divided into two categories: "consumers" and "producers." There is a flaw in your reasoning here. Actually, most of us fit into both of these groups.

The money we need does not magically appear, and it certainly doesn't always come in the form of cash. Instead, we have to put in time and effort in order to earn that money, so we have a vested interest in the well-being of the companies and industries in which we work.

Please understand that I am not claiming universal applicability by saying so. This law holds true regardless of whether or not we choose to save, invest, or pay taxes with our money.

As I see it, it's crucial to consider the dual function of producers and consumers when hearing people discuss the impact of the real exchange rate. This is an issue that needs fixing.

A stronger dollar might lead to lower prices for imported items, which can be good news for an American consumer. That same American, however, may worry about losing her income and, along with it, the specialized skills that she has built up over the course of her career if she works as a programmer at Apple, in a grocery store, or at a manufacturing firm that faces increased competition from imports when the dollar is strong.

The United States' manufacturing output has increased wonderfully in recent decades, but manufacturing employment has declined significantly. The Representatives were getting ready to implement a plan to reverse this trend until the New administration decided to knock down the border barriers instead.

An increase in imports from other nations has had a significant role, albeit it cannot be blamed solely for this phenomenon. It's understandable that people would be sensitive to what they see as unfair competition from abroad, especially when it comes to fast-growing exporters who benefit from the deliberate undervaluation of their currency. This is especially true for those who have lost skilled jobs as a result of this and have had to start over at much lower pay. They won't be comforted by the argument that they, too, benefit as purchasers from the cheaper prices of imported goods. They will be quick to remind you that they were much better off back when they actually had that high-paying job, despite the fact that imported technical products like cars were more expensive back then. They'll claim this even though their financial situation has dramatically improved since then.

The key idea here is that virtually everyone acts as both a producer and a consumer, and that these roles are very susceptible to the effects of real exchange rates.

People who can demonstrate convincingly that they have suffered losses as a result of the aggressive currency policies of nations with fast expanding exports typically receive more attention and compassion than those who have benefited more generally from lower import prices.

This is so because justice is more likely to be done in favor of those who can make a convincing case that they have been wronged. In this context, the share of U.S. GDP that comes from consumer spending is irrelevant.

Many factors must be considered, but there are even more dimensions of actual exchange rates and many more causes that affect those real exchange values; for example, the macroeconomic policies of different nations.

For those of us who need to bring food to the table, a strong currency imposes very real costs in addition to very clear benefits, because their livelihoods depend on industries in the United States that compete with imports or export commodities.

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About the author


Estalontech is an Indie publisher with over 400 Book titles on Amazon KDP. Being a Publisher , it is normal for us to co author and brainstorm on interesting contents for this publication which we will like to share on this platform

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