In the international economic system today, the US dollar's value is based on how much people are willing to give up of another currency to get one dollar. Thus, the dollar could be 'strong' where, for example, one dollar could buy 120 yen (the Japanese currency), or the dollar could be 'weak' meaning it would take only a few yen (like only 95) to buy one dollar.

The idea of a "Strong Dollar Policy" was a benchmark of the Clinton Administration's economic growth in the 90's and is something the Bush Administration claims to support. The Agence France Presse on 10-14-03 quotes Bush as saying: "I'm for a strong dollar policy. We've had a strong dollar policy in this administration." While Bush is very fond of talking about a "Strong Dollar Policy," the facts say Bush is doing all he can to promote a weak dollar. The Financial Post of 11-3-03 notes that the dollar has fallen 8.3% against the major currencies and 16.5% against the Canadian dollar this year alone. And the Administration is still seeking to get China and Japan to raise the value of their currency (thus further lowering the value of the dollar). Clearly, it is impossible to have a "Strong Dollar Policy" while advocating for a weak dollar.

The question now becomes why Bush is seeking a weaker dollar. The Daily Yomiuri on 10-15-03 explains that to win the '04 election, Bush needs the support of Industry (such as automobile and steel). Since World Trade Organization rules prevent the US from raising tariffs, Bush's main weapon to make US goods competitive internationally is to lower the value of the dollar. A weak dollar makes our exports become cheaper overseas and foreign imports become more expensive; thus, a weaker dollar would promote more manufacturing jobs and a short-term boost to the economy, making his reelection campaign more likely to succeed.

So if a weak dollar can increase jobs by improving our manufacturing industry, what's wrong with a weaker dollar? Ask the Wall Street Journal, which reported last month that it creates a host of negative consequences. For consumers it means fewer bargains, because foreign goods are more expensive (thus domestic manufacturers don't have to innovate and cut costs to keep prices low). Also, the US accounts for 31% of global consumption, so buying less foreign goods could be devastating to foreign economies (such as Japan, which needs the US to get out of its decade-long recession). International instability in foreign economies always reflects negatively in the US (remember the Asian crisis of the late '90s, and how during that time the US stock market took a hit because of it). In addition, though consumption of foreign goods will fall, the US will still run a large trade deficit because the US economy is so dependent on foreign imports, and the higher prices will hurt businesses needing these imports, as well as low income families (think of all the poorer people in the US who buy Chinese goods at Wal-Mart because that is all they can afford).

A weaker dollar is also problematic to the long term US economy. When the dollar was strong and stable, it encouraged foreign investors to put their money into the US economy, spurring much of the growth we saw in the '90s. Now that the dollar is weak, foreign investors are losing all the wealth their investments gained due to the exchange rate, thus leading to investors pulling their money out of the economy. Because Bush is working so hard to keep the dollar low, we can see that this is an artificial value which will not be able to be maintained for long after the '04 election. (Bank of America even believes the dollar will rise sharply against the Euro by the end of this year.) Once the dollar rises, foreign investors will be reluctant to reinvest in the US economy because they will remember Bush devalued the dollar once, and he could do it again. Thus, the US is losing years of investments from much of the world to gain a short-term boost for Bush's reelection campaign. I know the temptation to take the quick fix can be strong, but the US must reject this "Weak Dollar Policy" and do what is best for the future of this nation.