There is a limit to this. At some level of the $ either the manufacturers in the EM will not be able to stay in business or US corporations will have to give up some of their margin. Right now the way it works is we have a monopsony environmnet where large firms like Walmart buy from several Chinese suppliers and WALmart essentially dictates the price. Margins are razor thin and have been falling for the last 2 years, already there has been a lot of manufacturing consolidation in the EM and the resultant economies of scale have allowed EM companies to weather the preasure that the weak $ has put on their margins. On the flip side US corporate buyers are enjoying record profit margins. As the $ declines AND the consumer becomes more price sensitive and competition for a declining comsumer $ increases the margins at US firms will inevitably have to come down.
Americans can still buy the same amount with their weaker dollar. This week. As the dollars weakens further they won't be able to. He is supposed to understand all this, isn't he? I guess long term a weak dollar will help out. As people lose jobs in different sectors they can get that entrepreneurial spirit going and start making clothes here again. Just think how many opportunities to start your own business there will be. It will be great! It will suck in the interim, but long term it may work out.
Don't kid yourself. When the government debases the currency significantly, it NEVER "works out in the long run".
Gnome, you and I agree an just about everything. While this will hurt savers like us it may help the US economy. Let me give you an example. My good friend lives in Ontario, Canada. While on the surface he like the parity of USD/CD deeper down he tells me stories of how the economy is slowing down. A dramatic change in tourist dollars from the States started about a year ago, when is was around .8700. I read a story in the last couple of days about a high number of auto workers in Ontario that had been laid off down to an appreciating loonie. Now on the flipside since Canada is very strong commodity wise. A number of Candians have flocked to Alberta for the booming oil industry. This may actually encourage additional American mfg, but who knows, right?
I was just saying with a devalued currency there would be some good sectors and some bad sectors. We had a devalued currency in the 80's and as I recall, once again the US did not slide off the edge of the economic world... people are going nuts over this currency thing as if it had no precedent... they also seem to think that Bernanke assumes responsibility for their trades!! Sure, the Central Banks are going to win in the long run. They started working on their wealth hundreds of years ago, the typical trader on ET maybe started a year or two ago.. the life of a lender is to confiscate wealth over a long period of time, get over it... our job, as I see it, is to master trading, which is in between lending and borrowing IMO, and transition to lending, lending is much, much better than borrowing, this was known thousands of years ago, read the Pentateuch, it is stated there very clearly that lending is the way to go and borrowing is not the way to go.... Stressing over the government borrowing is not good, they are not going to stop borrowing no matter who you elect, the Central Bankers and the rest of that club want it that way and there is nothing that can be done to change it. Our job is to learn to negotiate the changes over time and confiscate wealth from trading by buying/selling risk or assets on our journey of transition to lending. If that was easy everybody would be doing it so thank God that it is so difficult!!
Don't matter. You can either have a manu economy or a market economy. You can make things or buy and sell things. We are a market economy. Anything that can be produced with paper and pencil seems to be our business.