Naysayer said : A Strong Greenback Is a Very Good Thing Indeed.
A Despite the conventional criticisms of the financial commentariat, both theory and evidence argue for a strong, stable, and reliable currency as a crucial channel to prosperity. Just think of the reverse: If you could devalue your way into prosperity, Argentina would be the center of the world economy.But lately, a loud and growing chorus is blaming the rising U.S. greenback for just about everything. “Multinational profits will suffer.” “Imports andtrade deficits will hammer the economy.” “Stocks will fall.” “Recession looms.”Wall Street insists that King Dollar is bad. It is wrong.This falsehood is a near cousin to the idea that falling energy prices will wreck the economy. Also wrong. Energy will slow, but the rest of the economy will benefit.In fact, the rising dollar, a key factor in the oil-price plunge, provides a double tax cut for the economy. Both will also promote world recovery.Over the past year, the dollar has appreciated about 20 percent. So what happened? The S&P 500 is up 11 percent and the American economy hasactually improved. While the underlying economic-growth rate is still a soft 2.5 percent, real GDP was up 3.5 percent or more in four of the last six quarters. And nonfarm payroll jobs have increased 3.3 million in the past 12 months, much better than the 2.2 million jobs gain of the prior period.And the inflation rate isnil.The consumer price deflator is flat. Import prices for the 12 months ending in February are down 9.4 percent. And finished-goods producer prices have slumped 3.4 percent.What’s happening? The dollar is up and oil prices are down. The economy, jobs, and stocks are up, and inflation is down.
