OPEC and Walmart love George W. Bush's weak dollar policy

[Lefty48197]

Whenever we have a Democratic President in this country, if somebody mentions a "weak dollar", then we usually get a knee-jerk reaction from the conservatives/nationalists such as, "This is America! We need a STRONG dollar!". Usually, it's Democrats who support a weak dollar, because it tends to help create jobs here at home, rather than abroad. Today, with George Bush fully supporting a weak dollar, the right-wing protests have fallen silent.
The extremely over-simplified definition of a weak dollar, is an abundant dollar. A "weak" dollar is one that is cheap and easy to get (relative to other currencies), usually due to low interest rates. What that weak dollar does is make it more difficult for us to buy imported goods. Therefore, we tend to buy more domestically produced goods, which results in more jobs, and the economic growth that follows a falling unemployment rate. Unfortunately, the weak dollar can also cause dramatic price rises in imported goods. Therefore, the Fed has to toe a fine line when setting interest rates, in order to prevent either extreme condition.
America had a weak dollar policy during the Clinton years, and it was very beneficial to our economy. Back then, however, there was a very important ingredient that is missing today. Early in Bill Clinton's first term, he and the Democratic-controlled Congress passed the Deficit Reduction Act of 1994. It was that act, that more than anything else, led to the balanced budgets, and eventual budget surpluses, that George Bush has quickly turned into a distant, cruel memory. We now have record deficits and debts.
With the federal debt gobbling up nearly 15% of income tax revenue, Bill Clinton's balanced-budgets were a boon to financial markets. Wall St. soon found themselves with ever increasing amounts of money to spend, and the DJIA skyrocketed because of it. All that stock market profit was more than enough to offset any inflationary pressures caused by the weak dollar, and because of that, our economy grew.
When George Bush broke into the White House in 2001 and began squatting there, he unleashed a disastrous set of fiscal policies upon the American public. First, he gave away the surplus through tax cuts targeted at the rich, which did nothing to help our economy, as most of the rich spent their money on land, a new Lexus, or a vacation in Aruba.
Now, with George Bush and his Republican controlled Congress spending money like drunken sailors in whore houses, our economy lacks the benefit of a fiscally responsible federal government. Because of that, the inflationary pressures that go along with a weak dollar remained unchecked. Nowhere is that unchecked inflation more noticeable than in the price of gasoline.
Think about it. George Bush went up to the OPEC nations offering them $25-30 for a barrel of oil. They had a problem with the fact that the dollar is so weak, so they responded by doubling the price of a barrel of oil. It now costs us about $55 for a barrell of oil, and the average pump price for gasoline is over $2.00 per gallon nationally. OPEC got their cut, it's just we Americans who are getting screwed at the pump, and are thereby suffering from George Bush's weak dollar policy.
Bush probably hoped to slow the massive influx of Chinese goods into this country, not because he wants us all to have jobs, but because he hoped to lower the unemployment rate before the 2004 election. He put heavy pressure on Alan Greenspan to keep the interest rates low. Many in the Bush Family blamed Greenspan for GHWB's loss in 1992, because the Fed had raised the interest rates, and Team Bush Sr. blamed the stagnant early 1990's economy on Greenspan.
Somehow last year, the Bush Family was able to convince Greenspan to keep interest rates low, when many others felt there was approaching inflation, and that rising interest rates were the solution. With a stagnant economy heading into the election, Team Bush needed a sign, any sign, that the economy wasn't a wreck. That's why they twisted Greenspan's arm to keep the interest rates low, which led to a further weakening of the dollar.
Unfortunately, many of the American people fell for it. People like low interest rates. Low interest rates result in lower mortgage payments, which allows people to save more money for that inevitable day when Walmart sends the last American manufacturing job to China. Those low interest rates result in the weak dollar.
It was that weak dollar that Bush hoped use to reduce our trade deficit with China. The Chinese thwarted his plan, however, by tying the value of their currency to ours. As the "value" of our dollar dropped, theirs dropped right with it, thus preventing any benefit we would have gained from a falling trade imbalance with China.
If American consumers are getting reamed by the weak dollar policy, and if Wall St. money changers aren't getting their cut, then who is benefitting?
Walmart, that's who. If the Chinese hadn't tied their currency to ours, then the cost of their products would have gone up, and nobody, but nobody buys more Chinese products than Walmart. The profits at Walmart would have taken such a hit, that I can't help but wonder if it wasn't Walmart's idea to tie the Chinese currency to ours. Hmmm.... I wonder if Walmart has a cozy relationship with the Chinese government? (We'll have to explore this at another time)
Now that our dollar has bottomed-out in value, and is getting somewhat stronger due to the rising interest rates, the Chinese have untied the values of our currencies. That makes our dollar worth just a little bit more, and Walmart is right there to reap the profit.
Am I advocating a rise in interest rates? No. It's far beyond my capacity as a "couch-economist" to make such huge decisions. I do wish, however, that we had a Fed chairman that would consistently do what is best for the American economy, instead of caving to one over-armed incompetent President who managed to bend Greenspan like a wet noodle. Greenspan stood up to George W. Bush, like Bud Selig stood up to steroids. Now, we're all paying the price. The fact that Greenspan is now raising interest rates, doesn't make up for the fact that he failed in his earlier mission.

[orwell]

1. Free Lunch

The Federal Reserve System needs to be abolished, beginning with the FOMC. It has handed over the Congressional Constitutional authority to set monetary policy to an elite cabal of private banking interests, who have used it to manipulate the true cost of money for a veritable risk free profit machine, subsidized by the US taxpayer.

The resultant 80+ years of endless inflation and exploding National Debt wrought by Fed policy has brought us to the point of begging for increasing amounts of foreign capital to fund the profligate "live beyond our means" American culture submerging in bathtub of rising fiscal and trade Deficits.

The repeal of Bretton Woods was the last straw for the "credit on crack" American economic engine. It was Nixon's real crime against the nation, not Watergate.

The is one thing that any couch economist should realize, there is still no free lunch.