The big story on TV is that a weak dollar is good news for large companies having a large business overseas. The implication is that what is good for them is good for the country.
Nonsense.
It is easy to weaken a currency. Just inflate, spend, give away money to specialized groups, forget about education and productivity, let the money supply grow as there was no tomorrow.
Yes, this is the picture of most Latin America countries a few years ago and of countries in total disarray. Does this mean they were doing fine because they had a weak currency?
A weak dollar is bad news for profits. Whatever the companies make overseas, they lose it here. And then some.
We should not accept the positive slant in the news because we have a weak currency.
Nonsense! Nonsense! Nonsense!
A weak currency points to slower economic growth and loss of competitiveness. This requires well-thought investment strategies because it implies increasing risk for the financial markets.
More on http://www.peterdag.com/
George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
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