One could speculate that President Bush, Treasury Secretary Paulson, and Federal Reserve Chairman Bernanke are using affirmations and mind programming to affect the movement of the US dollar. Perhaps they read or watched The Secret together and decided if they adopted the phrase strong dollar policy as their affirmation, it would become reality.
It’s obvious that the trio need a crash course in “Metaphysics 101”. In order to achieve the change you desire, you have to be 100% confident it will occur, and you have to take the appropriate actions to help manifest it.
Yet the more they repeat the strong dollar policy mantra, the lower the dollar drops. The US has “de-coupled” from the rest of the world because we are not taking action to tame inflation. This is why the Euro climbed over $1.60 yesterday. The oil exporting countries are exchanging some of their dollar reserves to buy Euros. The weak dollar increases the cost of commodities prices, creating a global food crisis and record oil prices.
On the surface their manifestation techniques appear to have failed. But maybe we are the ones who are misinterpreting what the Administration’s true economic policy is. A weak dollar boosts exports, helping to lower our huge trade deficit. More importantly, a weak dollar boosts the profits of US multinational corporations when they translate those Euros back into dollars. Corporate earnings appear stronger than they actually are, keeping the stock market indices artificially elevated. This way they can say “recession is possible” with a semi-straight face.
Just as the banks are the only ones benefiting from the Fed’s low interest rates, only the largest multinationals benefit from a debased dollar.
Related Post: “Recession: The Truth Is Out There”