David Malpass: The Weak-Dollar Threat to Prosperity

Measured in euros (a more stable ruler than the ever-weakening dollar), U.S. real per capita GDP is down 25% since 2000, while Germany’s is up 4% and tops ours.

The solution is a strong U.S. jobs and wealth program. It has to include stable money, a flatter, more competitive tax structure, spending restraint, and common-sense bank regulation so small business lending can restart. Treasury has to rapidly lengthen the maturity of the national debt and take steps to protect the Fed from market losses on its long-term debt holdings.

Instead, Washington’s current economic program pushes capital away by weakening the dollar, threatening higher tax rates, borrowing short (the Fed’s near trillion-dollar overnight debt, Treasury’s mounds of bill and note issuance) to lend long (mortgages, student loans, entitlements), doubling down on government subsidies, and rechanneling bank loans to governments and big businesses instead of the small business job-growth engine.

Read it carefully and read it all.

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Posted in * Culture-Watch, * Economics, Politics, Budget, Economy, Globalization, Office of the President, Politics in General, President Barack Obama, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The National Deficit, The U.S. Government, The United States Currency (Dollar etc), Treasury Secretary Timothy Geithner

4 comments on “David Malpass: The Weak-Dollar Threat to Prosperity

  1. Don R says:

    This would be a good Bush policy to lose, but with projected deficits where they are now, it just won’t happen. The author of this is correct that you simply cannot devalue your way to prosperity.

    It’s ironic that Germany, which this time resisted the temptation to overdo its intervention in the economy, has recovered reasonably quickly, while the US, which historically has done a better job of letting the economy work, has made its problem worse as a result of the government action aimed at fixing it. And all of that is exacerbated by plans to spend even more money that we don’t have to change our health care/insurance system, while we completely ignore the impending twin crises of Social Security and Medicare entitlements.

  2. BlueOntario says:

    A friend was commenting relaxedly that many of his investments have returned to nearly the same dollar values they were a few years ago. He seemed unimpressed by my comment that much of the gain is not because of increased value of the businesses in his portfolio but due to the fact that the dollar is worth less, making his stocks and mutuals cost more devalued dollars to purchase.

  3. John Wilkins says:

    That the commentator is an investment banker explains a lot.

    A weak dollar doesn’t affect most Americans all that much. Most of what we buy and sell happen within our borders.

    However, Americans can sell their products abroad more easily. It’s harder, however, for us to buy European products.

    A “weak dollar” is a descriptive term, and it is one aspect of living in a world of global capitalism. Germany has done well, in part, because the government intervenes in the economy. I wonder if that is what the commentator wants.

  4. Don R says:

    [blockquote]A weak dollar doesn’t affect most Americans all that much.[/blockquote]
    A weak dollar doesn’t affect most Americans [i]immediately[/i], but it certainly will affect all Americans. Hardly any manufactured good available today is purely US in origin.