The decline of the foreign exchange rate of the U.S. dollar – approaching ten percent this year – contributes to broader American anxiety about the U.S. economy.
Despite the stock market’s high level and many economists’ reassurances that the economy is doing well, that national anxiety persists. Americans’ unease is due to the real estate market’s slump, the sharply rising costs of rent, food, and fuel, and fear that an inflation-driven recession might be over the horizon – despite many economists’ reassurances to the contrary. Such economic concerns on the part of many Americans may or may not prove to be plausible. Time will tell. One can only hope that those economic experts who are positive about the country’s future are correct.
One indication that things will work out well for the economy is how the relative decline of the dollar is helping the economy by making U.S. exports more competitive internationally due to their lowering comparative costs. It is becoming increasingly obvious that, if handled correctly, the dollar’s decline could become a major asset for Americans’ economic future. What is far less obvious is how there may well be hidden geopolitical virtues embodied within the dollar’s decline.An indication of such virtues is how the shift in the exchange rates between the U.S. dollar and nearly all major foreign currencies is rapidly improving the ways consumers in other countries perceive the “Made in USA” label on products. One major exception to that trend is China’s refusal to join the floating exchange rate system, thereby keeping the yuan and the U.S. dollar tied to each other in ways that continue to make Chinese products cheap in the United States and fails to make the “Made in USA” label as financially attractive in China. Overall, however, the exchange rate situation helps American owned and operated companies producing products made by American workers export them to those foreign consumers who see them as good buys.