The Sarcasm Report v.9

Slumping Dollar Spells Good and Bad News for U.S. Consumers, Businesses and the Economy

Conversely, the depreciating dollar encourages travel to the U.S. by Europeans who gleefully find their money buys them cheaper accommodations and everything seems to be on sale.

Rule #1: OUR falling dollar doesn't buy as much. That really helps others gleefully use their own currency. Woohoo!

When the dollar loses value, U.S. manufacturers benefit as foreign trading partners buy up more of their goods. Construction and agricultural equipment maker Deere & Co. said last month that its third-quarter profit jumped 23 percent on strong international sales.

Rule #2: When the currency crumbles, Caterpillar and Deere are fantastic ways to dig up hard assets! I'm sure glad these two heavy construction equipment companies are representative of our service based economy! How can we lose?

That's why many currency traders think the Bush Administration is privately pleased by the dollar's decline, knowing that it turbocharges export sales.

Rule #3: Historically, things that have pleased the Bush Administration are fantastic for the American public. Just look how much exports have been turbocharged in recent years. Feel free to use a microscope to soak in all the details!

Currency traders make money by financing purchases of higher-yielding currencies like the dollar with lower-yielding currencies. They earn money on the assets backed by the higher U.S. interest rate, pay back the loan on the lower-yielding currency, and then pocket the difference.

Rule #4: Currency traders aren't nearly as smart as you or me. They do not care if the dollar falls 5% if the currency pays 5% interest. It is free money to them that they intend to spend on illusionary castles in the sky, complete with balloons, pixie dust, songs of merriment, and bottles of Jack Daniels! Well, assuming inflation and taxes don't take too much of a bite that is. Assuming.

Will this affect my paycheck?

Rule #5: The drop in the dollar will not affect your paycheck in the short-term. That's the best part of all! Your boss isn't going to come bursting into your office and exclaim, "The dollar has dropped 5% today so we're giving you a 5% raise to compensate." No, he'll continue to spend his time looking for a great deal on a new Jaguar, just like he did last week and the week before it. As he sees the price rise, he might even start to get a bit grumpy.

Falling purchasing power and rising prices force the Fed to balance its two major responsibilities: trying to maintain stable prices while promoting growth. Wall Street is hoping they focus on the latter, at least for now, crossing its fingers for a rate cut to jump-start the economy.

Rule #6: Always concentrate on growth. Just ignore $80 oil. Further, since the falling dollar is so great for everyone involved let's just embrace growth whole-heartedly. Perhaps the government could legalize the counterfeiting of money (assuming they can't keep up using their own monetary printing presses and helicopters that is). That would take our turbocharging export business to a whole new level entirely!

Got wheelbarrow?