U.S. on borrowed time, borrowed money, borrowed energy

If anyone has traveled to another country lately realizes that the U.S. dollar doesn’t buy what it used to. Americans had the luxury of purchasing more goods in foreign countries at a lower price than in America. What is the reason? The value of the dollar was worth more compared to the euro and the yen a few years ago, and has been declining since. Foreign investors are now looking to the U.S. to invest and buy products just like we were looking in other countries just a few years back. The price of oil is now costing more with the rise in prices and the declining dollar. What can we do to stop the dollar from falling? If the government raised taxes and cut spending on oil then we could slow the dollars fall and help the deficit. In the article U.S. on borrowed time, borrowed money, borrowed energy , the Bush administration says they are not going to raise taxes, cut spending or reduce oil consumption in ways that could really shrink our budget and trade deficits and reverse the dollar's slide. If we don’t do something, who knows what will happen.


sam said...

I agree that something needs to be done about the deficit. What I want to know is what the costs would be of implementing these ideas. If taxes were increased would it be for everyone or only the wealthy? This tax increase could have adverse effects. For instance, if the lower income class were to be taxed more, they would need to take more benefits from government programs. This could be more harmful than good.

Would a railway system be cheaper, better, and accepted by the public. If the railway met all these criterion then it might be beneficial.

It is easy to say we need to increase the value of the dollar and make speculations of what we could do. The hard part is doing the cost/benefit analysis, to see if it is worth it.

Jim said...

I heard something on the radio the other morning about what you have written your blog on, but I was not able to listen it because of time. I would like to see what is going to happen, if anything, about the reduction of the US dollar. I just hope it is good.

Emily said...

The U.S. dollar has become weak over the years and I agree that there needs to be a change to make the dollar stronger, but as stated earlier how does America go about doing it. How is America going to make the world more confident in using our money? One way would be to figure out the debt problem and fix it then other countries would feel more confident investing in America

Dr. Tufte said...

What does this have to do with ManEc?

As a macroeconomist by training, I am not insensitive to issues like this. But I would like to say categorically than I would be pleased if none of you fell for the sort of hyperbole used in the source article. Be more skeptical when you hear "chicken little" arguments.