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| http://www.ibdeditorials.com/IBDArticles.aspx?id=281319253631471 Don't Fear The Weaker Dollar — It's Keeping The Economy Afloat
By INVESTOR'S BUSINESS DAILY | Posted Friday, November 30, 2007 4:30 PM PT
The plunge in the dollar has turned normally calm voices strident and fearful. A weak currency, they say, spells catastrophe for the U.S. economy.
But like much conventional wisdom, this isn't true. Nor is it true that the dollar, to use one favorite recent word, has "collapsed."
You wouldn't know it, however, from recent headlines. This week's Economist magazine, known for its cool-headed discussion of economic events, has this on its cover: "The Panic About the Dollar."
Others see in the dollar's slump a metaphor for America's future — one of decline and waning influence in the world.
To be sure, the dollar is down almost 40% against the euro since 2001. Against the pound, it's off almost 44%. It's even down against the yen, by nearly 13%.
But put in perspective, these declines are neither dangerous nor even undesirable. Over the long-term, the dollar is well within normal bounds. After years of rallying due to massive flows of investment into the U.S., the dollar has simply come down to Earth.
To say it has "collapsed" or "plunged" is simply wrong — as the chart above shows.
Look at the dollar weighted against all its trading partners, not just a cherry-picked few, and you see the dollar hasn't plunged at all. It's about where it was 10 years ago — during the Internet boom.
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Value of the US Dollar
