September 2007


Weak Dollar

I’m not an expert when it comes to the currency swings. My friend Jerry has his explanation for the weak US dollar, based in part in technical jargon related to the current subprime housing loan crisis, the ever increasing national debt and the like.

I cannot deny that these are legitimate direct casual links; however I believe the weak dollar is also a reflection of hope and the reputation of the US.

The United States, as recently as September 2001, was in the enviable position of having friends and trust in the world—a large community of nations trusted the States, and it was able to assert a moral authority that was believable and respected.

However, under W, the States has lost its moral authority and, along with that, it beacon upon the hill has burned out.

Yes, America was a beacon upon a hill: the land where economic hope and opportunity lay. America is a land of immigrants—few people living in America are descendants of actual natives. (Parenthetically, I must note, that just because my Ancestors moved to America from (now) Old Europe, that I am no less a “native” citizen of the United States than the descendants of actual natives.)

However, America is no longer attracting the same number of immigrants that it attracted in the past. Much of this is due to the fact that under W, the States has become increasingly hostile to immigrants. Building a wall between the United States of America and the United States of Mexico, efforts to deport the so-called “illegal immigrants” back to Mexico, and, since September 11, the current religious war against the Muslim faith have done nothing to enhance the reputation of the United States.

Now I realize that I’ve written most of this in the third person, so let me clarify. I am an American by citizenship and birth. I have no plans on giving up this citizenship—the blue passport is still incredibly powerful and valuable, despite everything that W has done to devalue it and the currency. But it remains that I write this in the third person because although I am an American by citizenship, it is not currently my country by spirit: Unlike his father, W is not my president.

Meanwhile I have the privilege of seeing the current beacon upon a hill grow brighter. The European Union is that beacon—an unlikely amalgamation of 27 diverse and divergent nations that have collectively decided that rather than seek 27 separate paths, that by joining together they could come together and create something better. (Obviously the story is far more complicated than the simplified story I tell here, but the point remains: 27 nations have come together instead of separating.) This Union allows for the French to complain about Polish Plumbers invading and taking jobs, while at the same time allowing their Renault Automobiles to profit from expanding markets in the East.

The European Union offers tangible hope to its citizen and prospective citizens—and the temptation of membership can reform and reshape governments—see Romania and Turkey as examples of nations that have and are reforming because of the European Union. (And, since I like to talk about Armenia a lot, the EU is hope for some people living there, even if EU membership is at least, in my estimation, 30 to 40 years away.)

And there is why the dollar is so weak: the United States does not offer hope right now. It offers, instead, negativity and an isolationist bent that scares people. The strong Euro, on the other hand, reflects a rising continent. Economic indicators only reflect the emotive core of people responding to the rhetoric of the United States and of the European Union.

4 comments to Weak Dollar

  • That beacon on a hill you currently find yourself in is populated by folks that seemingly forget how much the USA gave them when they talk about the US getting its economic house in order.

    This is all done whilst demanding that the US continue to be the global policeman while they sit back and neglect their obligations as the new beacon on the hill. These days they seem shocked, shocked I tell you, when the US says to them, “If you are so worried about the situation in region ‘X’, go take care of it yourself…”

    It’s easy to be the beacon on the hill (EU) when you get someone else (USA) to do your dirty work for you.

  • CQ: I’m not sure what you mean. The EU lacks an “EU Military” so there cannot be a broad EU-request for the US to act as global policeman. Besides, I don’t have the impression that EU citizens want the US to act as global policeman: The US wants to act as global policeman. If you’re talking about requests through NATO, although overlapping with EU members, NATO members are not the same thing. If the US doesn’t want to fulfill its obligations that it agreed to fulfill when it joined NATO, then it should pull out of NATO.

    The US isn’t a beacon on the hill because it hasn’t behaved in a way worthy of maintaining its status as beacon upon a hill.

    The EU, on the other hand, is a beacon upon a hill because its created hope and opportunity within its borders and close by (see Turkey).

  • My point is that it’s easy for the EU to be smug when it’s not their treasury or taxpayers that are continually called upon to do things, that if left undone, would be a detriment to themselves.

    And you’re right, the EU has no formal military structure of its own. They’ve got the best of everything. Continue to yell at the US for not getting its financial house in order while your (EU) system doesn’t have the burden of supporting a huge military that is nearly at the beck and call of the “red phone” of the world.

    With the notable exception of Iraq, that red phone is used quite a bit. One of the things that is causing me to be grumpy is that the Europeans cry out about how the US is doing nothing in Darfur and places like that, while they sit back and do nothing themselves. What’s stopping them from handling it?

    My point is that there is a certain expectation that the US will do something. And I think the US is getting tired of being expected to do so.

    I do agree with quite a bit of what you’re saying, I just think you have the wrong idea as to why the currency in the US is taking a hit. It has nothing to do with goodwill, it has everything to do with trade imbalance and the government “credit card”. If the US stopped being the policeman of the world, other nations would probably get upset at no action being taken, but we’d certainly be able to reign in a LOT of the other issues that are causing weakness in the dollar.

  • Thanks for the link to my post, and I think that your comments are also legitimate and right on target.

    My original post contrasted Canada and the US, so I think a Canada-EU comparison is also in order, starting with a few of the points you raised.

    1) Canada’s per-capita immigration rate is the highest in the developed world, and the country continues to admit a large number of immigrants each year. The immigration rate to E.U. member states is variable, but the regulation permitting internal (i.e. intra-E.U.) migration between countries for work or residency offers a ‘beacon of hope’ not unlike Canada’s. Canada and the E.U. seem to be on a similar path that diverges from the U.S. position on this issue.
    2. Canada refrained from joining the Irag war, along with several E.U. member states. Among European nations that joined the Americans, polls showed widespread popular opposition. The populace of Turkey, a prospective E.U. member, was strongly opposed to its government’s decision to ally itself with the American war effort.
    3. It would be hard to link social issues to currency fluctuations, but Canada’s position on many social issues (death penalty, drug policy, health care, gay rights, etc.) is identical or similar to Europe’s.
    4. Canada shares one risk with certain E.U. member nations (Belgium, Spain, U.K.): the possibility that a region/province will separate from the parent country.