Fed Chief Bernanke Claims We Benefit From Weak Dollar
Posted on May 8, 2008
Filed Under Economics, Monetary Policy
In his recent testimony on Capital Hill, Fed Chairman Ben Bernanke cited the benefits of a weak dollar policy, in particular how a feeble dollar boosts exports and export related jobs and positively impacts the trade deficit. Are you f&*%in’ kidding me? This old yarn has been bandied about for years to help justify our failure to stand up while the greenback gets bloodied in currency markets.
Yes, a weak greenback lowers the cost of American goods in foreign markets and boosts the cost of imports here, but the positive impact on jobs is short-term at best. Currency exchange rates are not fixed and along with the prices of basic commodities quickly adapt to the weakened dollar. Any positive impact that the falling dollar has on trade and jobs is thus quickly wiped as soaring costs move to equilibrieum with exchange rates. As I’ve written about repeatedly, the 70’s era pricing pressures that we are experiencing now are a biproduct of reckless monetary policy by the Fed and irresponsible fiscal policy in Washington. We are all experiencing the pain of the government’s short policies, but I’m not sure I see anybody feeling those benefits Bernanke was talking about.
What I don’t get is why our government officials lets the Fed Chief get away with such bunk without even calling him on it.
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