The US wants to depress the value of the dollar by diluting $600 billion into the market, so that it can sell its products abroad more easily. In light of the ailing US economy, isn’t that a completely reasonable strategy?
in hindsight, china did this too by making yuan undervalued to give a great advantage over their export by selling it cheap. What’s weird about China isn’t the devaluation, it’s the extreme market controls which allow them to devalue while keeping interest rates high and local demand down, forbidding foreign investment without local majority control.
recently US Treasury Secretary Timothy Geithner constantly criticizes government officials in countries (such as china and german) that are achieving high export surpluses and not doing enough to stimulate their domestic economies, because the US keep consuming rather than producing.
The idea that Germany should curb their exports to the US because of their trade surplus is also ridiculous. Germany still makes high quality luxury goods which American consumers want. If American companies (such as GM and Chrysler) had focused more on making products to compete with Germany in sustainable, long term international competition then they would never have failed and consumers would have benefited from an increase in the amount of choices available to them. Instead, they strove to cut costs in the short term to see inflated profits with no consideration for their long term strategy to remain viable in the global market place. It is impossible to keep up in terms of R&D, quality, and maintaining strategic flexibility when you are operating with a bare bones cost structure because you are trying to deal with bloated union contracts and pension plans.
There is no quick fix for US economy, and devaluing the dollar with $600 billion in quantitative easing to artificially boost sales overseas, does nothing but provide a band aid. America has a lot to learn from German business men.
Consider this for a moment. Clinton had a surplus, George Bush spent loads of cash and created a giant hole. The economy crashed during war times; which is crazy because the opposite is supposed to happen. Why? Consider the recession in 2000-2001. The reason for that recession is attributed to the price of oil/gas. Well even with adjusting for inflation, oil is just as high priced as it was then. The reason for the recession is still present. What the american government did was increase spending. Which temporarily covered up the recession.
9/11 happened and the effect on world trade was terrible. They had to goto war. Democrats take house/senate and cut spending significantly. Economy falls back into recession and housing bubble and such goes with it. The reality is that the Recession started in 2000 and has been active since and only left this unrealized because of the borrowed money covering the problem. Even then… the thing necessary to change is the oil problem.
either way, there is just no viable solution for the recession that’s happening in the US now.