Why All Americans Should Want a Strong Dollar
[This is an excerpt from an earlier article]
Imagine you had a big pile of gold in your basement. Even better, imagine you had a gold mine in your basement and you could go get almost endless amounts of gold. None of your neighbors have this. Now, imagine wanting the value of gold to plummet. Your argument for this is that if the value of gold would just drop, your wife would start working in that garden again because right now she is just buying her vegetables from the store with gold.
Well, that is the argument for a weak dollar. We have this thing that the rest of the world considers valuable. We can print it. But the drawback is that when the dollar is strong, no one wants to start factories in the USA. If they did, they would have to pay in dollars for the work we do and the products we make. Better to make it in China or some other place where the people work for peanuts.
But our goal as a nation should not be to make it so our workers are working for peanuts too. Reducing the value of the dollar so that factories move back to the US is the equivalent to making the gold in your basement worthless so that your wife will just get to work. No, keep that gold valuable. If your wife wants to garden for fun, great, but she should not have to for the family to survive. If she prefers to do things that might actually bring value to the family (maybe teach the kids or cook delicious meals) she could do that instead. Why force her to do something (garden) when, with that valuable gold, she could do anything she wanted?
Few parents I know want their kids to be factory workers. With a healthy economy and a valuable dollar, we do not need to have our people growing up to work on factory floors. We can pay the Chinese, the Mexicans, or the Vietnamese to do that for us. We can do other stuff with all our money. We can start restaurants, create art, become engineers, teach, go into the sciences, etc etc. Now, of course, we don't have to. There are still plenty of factories in the US and if you want to work in one, chances are you can still find a job (but like your wife working in the garden, it might not be the most valuable thing you can do with your time). But if we weaken the dollar enough, we will have to. Buying Chinese or Mexican products will become too expensive.
Trump has recently been signaling that he wants a weak dollar. This is a bad move. To the contrary, we should all want a strong dollar and do everything we can do to avoid weakening it.