Depreciation of Currency : Lost Production Output

Again, when those in power decide they are smarter and more able to control outcomes then the free market, you can rely on failure to follow. Witness our current economy and those that are dictating outcomes from Washington.

The progressive socialists Democrats that believe they must change our country to make it more fair for everyone are succeeding in their fundamental ideology. It is becoming apparent that soon we all will be dependent and living a reduced life style for generations to come.

I wonder what all those that voted, twice, for Mr Obama and his progressive socialist liberal left Democrat party, are thinking now given the four and a half years of absolute failure of everything they have done to change our country.  hmmmmm   Maybe it isn't a failure. Maybe they are getting just what they wanted all along.

The High Cost of a Cheap Dollar
Source: R. David Ranson, "The High Cost of a Cheap Dollar," National Center for Policy Analysis, October 2013.
October 24, 2013

The United States and other countries intermittently or persistently pursue currency depreciation -- to the point that the phrase "currency wars" is now part of many nations' vocabularies. Switzerland and Japan remained among the holdouts for many years. But, in the last few years, central banks in both countries have joined the movement, says R. David Ranson, a senior fellow with the National Center for Policy Analysis and president and director of research at H.C. Wainwright & Co. Economics.

The question at issue is not whether currency depreciation benefits the United States relative to other economies, but whether it benefits the U.S. economy in absolute terms.

• If the foreign-exchange value of a currency falls, the exports of the country appear to be cheaper in other countries, and imports from abroad appear to be more expensive.
• Cheap currency policies are therefore widely justified as boosting "export-led growth."

Evidence from the United States shows that currency depreciation leads to a temporary boost in exports, but reduced growth in total output. A small part of the boost to the export sector from currency depreciation appears to persist in the long run. But it is achieved only at the expense of slower growth in the economy as a whole.

Exports are part of the cost side of the economy; imports are the benefit the country gains in return for that cost.

• Economic policies that promote exports at the expense of imports, such as currency depreciation, reduce the growth of gross domestic product over time.
• That shift substantially lessens long-term gains in the real value of exports produced by a cheap dollar.
• Public policy can manipulate the currency and the economy to increase the amount that exports contribute to national output (GDP).
• But a country that succeeds in this effort has impoverished itself.