The buck is currently at a 14th-month low compared to a basket of foreign currencies. (Dantes) What does this mean for the US, and what is going to happen if the clam keeps depreciating? Well, that is a very complicated question to answer. Arguments shadow be thoroughly contended on each side of the case, scarcely after completely breaking the issue down and looking at at the long term effects rather than the swindle term furbish ups of this matter, it is clear to see that a weakening dollar is not in the best long-term economic interests of the rustic nor global economy. According to Stephen Jen, a managing director at BlueGold corking Management LLP in London, allowing the dollar to sink is a scheme of benign neglect. (Shah and Frangos) What Jen means is that the US government is currently allowing the dollar to weaken in a laissez faire manner. Instead of expressing bushel for the radical decline in the currency, the government is simply basking in the short-term economic boost it is receiving from the increase in exports and is hoping for a global rebalance of the economy.
While this global rebalance of the economy is possible; history, as well as facts and figures shows that if the dollar keeps weakening, the US economy give suffer. A weak dollar leave negatively affect the US budget deficit, increase inflation, contradict the viewpoints of the Japanese government, and descend confidence in the global economy.
The weakening dollar will negatively affect the US budget deficit. The US is intercommunicate to end fiscal year 2009 with a deficit of $1.4 trillion, the biggest deficit the country has seen since 1945. (Eddings and Keene) This deficit is not necessarily bad. According to Keynesian economic theories, running a fiscal deficit and change magnitude government debt can...If you want to get a full essay, range it on our website: Orderessay
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