After you..No, After you...No please, I insist After you
Bob: Did you know that some people in Europe don't like us Americans?
Bill: Yeah of course.
Bob: Do you know why?
Bill: Well sure. They don't like how cocky we are. How we police the world. Behave hypocritically in our trade policies.
Bob: Yeah those are some of the reasons. There are lots more but those are some of the ones that most people think of.
Bill: Of course.
Bob: Well another thing you might not have known is that they don't like our exchange rates policy.
Bill: Our what?
Bob: Our Exchange rate policy. It is the policy on which we base our decisions that affect the value of our currency, the dollar.
Bill: Yeah, I have heard of this. Some groups in Europe, namely exporters, have been irked with the US because our dollar has been losing ground against the Euro.
Bob: Right again Bill. When our dolllar gets weaker against the Euro, European exporters get upset because their prices look really high when compared to the prices of goods sold for dollars. So then they won't sell as much and their economy is in result kind of sluggish.
Bill: So they are mad at us for having a weak currency?
Bob: Yup. But this is the problem it isn't our fault.
Bill: Then whose fault is it?
Bob: It is theirs Bill...It is their fault. Let me explain.
See our formal policy on currency valuation and exchange rates is that we have no formal policy. We have what is called a "fully-automatic" or free floating exchange rate. It is affected by a number of things in our economy that are too numerous to list. Most of these are things over which we hold no direct control. They just happen to be performance stats on our nation economically.
Bill: So wait! I get what your saying we cannot change anything dramatically to change the value of the dollar.
Bob: Right. Well...kind of. We can try not and run huge budget deficits but that is another story. There is a much simpler and logical solution.
Europe can lower their interest rates. It is perfect. Some of their biggest problems are not that our dollar is too weak its that their euro is too strong. Other problems include high unemployment (10% approx while the U.S. is mildly happy with 4%) and generally sluggish economic growth. Interest rates going down would fix all of that.
Bill: Ok, so your telling me you have solved Europe's economic crisis with three words...low interest rates? Nobody thought of this before you?
Bob: Of course others have thought of it.
Bill: So why don't they do it?
Bob: Well Bill, they are scared....scared of inflation. Which is understandable considering their past but it does not give them the right to try and coerce us into changing our currency policy because they are too scared to fix theirs.
Bill: Hmm, So they could solve their own problems without ever complaining to us? Sounds good to me.
Bob: Me too Bill...me too.
:: End Convo
Just thought I would try that format out.
Bill: Yeah of course.
Bob: Do you know why?
Bill: Well sure. They don't like how cocky we are. How we police the world. Behave hypocritically in our trade policies.
Bob: Yeah those are some of the reasons. There are lots more but those are some of the ones that most people think of.
Bill: Of course.
Bob: Well another thing you might not have known is that they don't like our exchange rates policy.
Bill: Our what?
Bob: Our Exchange rate policy. It is the policy on which we base our decisions that affect the value of our currency, the dollar.
Bill: Yeah, I have heard of this. Some groups in Europe, namely exporters, have been irked with the US because our dollar has been losing ground against the Euro.
Bob: Right again Bill. When our dolllar gets weaker against the Euro, European exporters get upset because their prices look really high when compared to the prices of goods sold for dollars. So then they won't sell as much and their economy is in result kind of sluggish.
Bill: So they are mad at us for having a weak currency?
Bob: Yup. But this is the problem it isn't our fault.
Bill: Then whose fault is it?
Bob: It is theirs Bill...It is their fault. Let me explain.
See our formal policy on currency valuation and exchange rates is that we have no formal policy. We have what is called a "fully-automatic" or free floating exchange rate. It is affected by a number of things in our economy that are too numerous to list. Most of these are things over which we hold no direct control. They just happen to be performance stats on our nation economically.
Bill: So wait! I get what your saying we cannot change anything dramatically to change the value of the dollar.
Bob: Right. Well...kind of. We can try not and run huge budget deficits but that is another story. There is a much simpler and logical solution.
Europe can lower their interest rates. It is perfect. Some of their biggest problems are not that our dollar is too weak its that their euro is too strong. Other problems include high unemployment (10% approx while the U.S. is mildly happy with 4%) and generally sluggish economic growth. Interest rates going down would fix all of that.
Bill: Ok, so your telling me you have solved Europe's economic crisis with three words...low interest rates? Nobody thought of this before you?
Bob: Of course others have thought of it.
Bill: So why don't they do it?
Bob: Well Bill, they are scared....scared of inflation. Which is understandable considering their past but it does not give them the right to try and coerce us into changing our currency policy because they are too scared to fix theirs.
Bill: Hmm, So they could solve their own problems without ever complaining to us? Sounds good to me.
Bob: Me too Bill...me too.
:: End Convo
Just thought I would try that format out.
posted by Trip at
10:18 AM
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