It's the US Dollar, Stupid!

[Tarheel]

This is an excellent synopsis of basically what is ailing America right now...it's the Dollar stupid!

This is from Larry Kudlow's Money blog (as an avowed capitalist I enjoy reading this blog from time to time; as usual all emphasis is my own):

Bush Whiffs on the Dollar

In his news conference today President Bush really didn’t get to the key point on soaring gas and food prices: The best short-term policy is to strengthen the dollar. Bring back King Dollar.

Whether it’s energy, wheat, grain, corn, or whatever, since these raw materials are priced in dollars on global markets, a strong greenback will reduce commodity prices. And that, in turn, will lower both consumer and producer inflation. This would help corporate profits and would boost the purchasing power of wages.

In other words, a strong dollar would relieve gas prices and boost the economy. But so far as I know, the president never mentioned the dollar. And I don’t think any of the media people asked him about it.

Right now Mr. Bush should order his Treasury Secretary to appreciate the greenback and work with the G7 for concerted action that would send a strong signal to commodity and currency traders that they better close their short positions on the dollar and stop speculating on higher and higher commodity prices.  Mr. Bush himself should adopt new rhetoric on a strong dollar. He should make it unambiguous.

In today’s consumer confidence report, inflation expectations surged to 6.8 percent for the next year. One year ago they were 5.1 percent. This is not good.  And of course, gasoline prices at the pump as well as supermarket prices for food are becoming huge political issues. Huge!  Bigger than the war and bigger than the economy. 

Additionally, the president really missed the ethanol questions. He acknowledged that ethanol mandates are contributing roughly 15 percent to rising food.  But he didn’t indicate any interest in eliminating the ethanol subsidy (a subject on which Deroy Murdock has artfully written).

The president was dead right in opposing the huge $280 billion farm bill. But on ethanol and the greenback he whiffed.

This is too bad, because the Fed meets tomorrow and is likely to end its interest-rate cuts after one more quarter point. I would prefer the central bank not even make the last cut to 2 percent. Money-market futures are now predicting a higher fed target rate next year. And if that expectation pans out, it will give a boost to the dollar and reduce all these inflationary pressures.

But defending the currency should also be done by the commander in chief and his Treasury man. As the Fed begins to shift gears, now would be a great time to resurrect the dollar.

Truly, we need a return to King Dollar and an end to the U.S. peso. Senator John McCain, are you listening?

Here's the link:
http://www.kudlowsmoneypolitics.blogspot.com/

[GarMan]

Just an observation that probably warrants additional thought...

Good article, but there's one problem.  I really don't see any good ideas about how we can strengthen the dollar.  Economists would argue that our trade deficit combined with the outsourcing and off-shoring of our manufacturing have ultimately resulted in this problem.  As a nation, we don't really produce anything tangible anymore, or at least, nothing that's marketable in the world economy, and we’re not on the gold standard anymore.  Yes, we have brains...  Yes, we have thinkers...  Yes, we have innovators…  But, we don’t have any products of value to compare on a global market that would help stabilize our dollar with other foreign currencies.  We’ve become a service based economy. 

Now, here’s an idea.  Recently, the “experts” released that there was nearly a 200 year supply of oil, based on current US consumption rates, under South Dakota.  There’s another 50+ year supply in ANWR.  There’s at least another 100+ year supply in the Gulf of Mexico.  Ignoring the speculation of what’s under the Atlantic shelf and other regions of the United States, we have a tremendous supply of oil, but current environmental regulations prevent us from going after most of it.  Even worse, the estimated average costs for retrieving this oil would be around $50 a barrel.  The global rate for oil is approaching $120 a barrel.  What do we think this would do for the dollar?  What do we think this would do for the entire economy?  We have the same exact situation with coal.  Again, this nation has a tremendous amount of coal, but irrational environmentalism has us in a chokehold, and we’re allowing it to impact everything.  This whole situation is a complete charade. 

[Tarheel]

Fair enough observation GarMan.  I don't see this country developing our national resources of oil and further coal development for exportation any time soon though unless the general public really starts to put more pressure on Congress and the Executive branch.  The Democrat Congress and all of the presidential candidates are leaning away from further domestic oil development unfortunately.  Well, if gas prices get high enough you'll certainly see a change in the public in terms of putting pressure on Congress; because it is clear that the Pelosi Congress can't get anything done without some kind of external pressure.

I couldn't agree with you more about the drawbacks of our service economy. And I'm not seeing any solutions to strengthening the US Dollar on any of the candidates websites either which I find troubling.  McCain wants further free trade but as you say; what are we trading?  Every nation wants to sell to the US but not buy what few products we manufacture.  Perhaps the answer is to bring back import tarriffs and encourage American companies to reinvest in America for manufactured goods.  A return to the gold standard might also be a consideration.

President Bush could be a lot more effective using his Bully Pulpit too which is the major point that Kudlow is trying to make (and I agree).  I have been very disappointed in his speeches on the economy lately (not to mention McCain's irrational position that the US is in a Recession and that is not true.).  Just today it was announced that the U. S. economy did, in fact, grow the first quarter of 2008.  So where are the consequetive quarters of no growth or economic retrenchment?!  What we need is a leader with the cojones to speak up about the postive growth in the American economy for one thing.  A large part of the problem here is a lack of public confidence in the economy which is irrational and, of course, being helped along the way by the Democrats and their liberal media friends.

[Thrilla]

President Bush could be a lot more effective using his Bully Pulpit too which is the major point that Kudlow is trying to make (and I agree).  I have been very disappointed in his speeches on the economy lately (not to mention McCain's irrational position that the US is in a Recession and that is not true.).  Just today it was announced that the U. S. economy did, in fact, grow the first quarter of 2008.  So where are the consequetive quarters of no growth or economic retrenchment?!  What we need is a leader with the cojones to speak up about the postive growth in the American economy for one thing.  A large part of the problem here is a lack of public confidence in the economy which is irrational and, of course, being helped along the way by the Democrats and their liberal media friends.

Hey, you leave our Commander-in-Chief alone.

[Tarheel]

Hey, you leave our Commander-in-Chief alone.

Don't get me wrong.  I did vote for him.  We Republicans can be critical of our own whereas with Democrats their scheit don't stink under any circumstance.

[Thrilla]

Don't get me wrong.  I did vote for him.  We Republicans can be critical of our own whereas with Democrats their scheit don't stink under any circumstance.

I didn't get you wrong.  I just really like that button.

And speaking of

whereas with Democrats their scheit don't stink under any circumstance

even Monica knows better:

[Tarheel]

I didn't get you wrong.  I just really like that button.

And speaking of  even Monica knows better:

I guess that I'm getting you wrong...I'm just getting the red X's for your attachments Thrilla.  No pitchurs...

[GarMan]

I guess that I'm getting you wrong...I'm just getting the red X's for your attachments Thrilla.  No pitchurs...

Me too...

[Thrilla]

It's shows fine on my computer.  It's the curse of the red x.  I will attach it later.

[Tarheel]

It's shows fine on my computer.  It's the curse of the red x.  I will attach it later.

Probably my security settings...I do get a "Security Alert" prompt every time I visit this particular thread.