Is the dollar playing with fire?

[grimm]

Originally posted by RawAlex@Nov 24 2004, 07:29 PM
Rolo, that only happens for a while. At a certain point, the shift in "cost" in each of the countries makes many things that use to be worth buying from the other less of a bargain. You can get to a point where trade effectivesly shifts direction, with what was the high price producer suddenly becoming the low price producer.

Cross border shopping between Montreal and Plattsburg NY is up 50% in two months, according to a report on TV today.

In the short run, it can create a mini-boom in the US economy, as real estate and other assets priced in US dollars suddenly become much cheaper to foriegners, which brings in outside money. The downside, as happened about 15 years ago is that this creates inflation pressures, as people outside can afford to pay more than the people inside the economy.

It hurts everyone in some way when the balance is shifted, and when it is shifted so rapidly, it can really leave whole industries, existing trade partners, and potential future trade partners in trouble.

It really isn't good for anyone... worse for those suffering inside the economy in question.

Alex

CNN had a story on the negative effects of the weak us dollar. most european countries are looking at the worst shopping and tourism seasons in decades. foreigners sinmply dont want to pay 50 bucks for A 10 buck pair of gloves, so the dollars stay in the wallets, the hotels stay empty, etc.