Quote:
Originally Posted by GreyWolf
Normally correct - and the weaker dollar has had a fractional benefit recently. But - the core problem is there is nothing like enough exports to get near balancing the permanent trade deficit. Not sure why exactly - may be related to a lack of "exportable goods" and possibly a reflection on industry.
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It's US consumption and trade barriers other countries put on goods that compete with their own !
The theory is that China with over 1.3 billion people will become a "consumption" machine once their economy gets to a certain point which is getting close. Once they reach this point their imports will rise to such an extent they will spend down their cash reserves and the US and Japan will benefit greatly.
A good example of what happens when a country's currency gets too strong is Japan.
In the 1980's the Yen was worth 240 to the dollar and then it went down to
120 to the dollar and they went into a 13 year recession because the cost of their exports doubled !