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RE: Bounty:Why a strong USD may crash the world economy
The Strong Dollar Bad Argument is related to
- debt is denominated in dollars so it makes it harder for Non-US actors to pay off their debts, making it more difficult for emerging nations to grow
- strong dollar siphons away investment from non-US countries because it usually means there is a high interest rate differential in favor of the USD (this is the monetary "cleanest shirt in the dirty laundry argument")
- it hurts firms that export from the US (though US as a net importer so not too big a deal, I agree, but politicians may boohoo the strong dollar because it hurts key manufacturing interests in swing states)
- Last I saw, S&P500 earnings were about 45% foreign, so a strong dollar not so good for those earnings on a relative basis.
- Lastly, maybe you think dollar hegemony is bad? Because a strong dollar will only bolster that.
That's all I got. Interesting thought experiment.
Ur again looking at this from a us perspective. All i get is the dollar and commodities argument.
Naw man, not looking from just US perspective. Look at #1 and #2.