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Falling Dollar

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"Falling Dollar"

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If you’re traveling to Western Europe, the falling dollar is definitely a bad thing, but as Tyler Cowen says a weaker dollar probably isn’t a bad thing at all as a general matter. After all, the distributive implications of something that’s bad for American tourists and purchasers of European products but good for Americans who work in the tourist industry or manufacturing are predominantly egalitarian.

The trouble, though, is that “falling dollar,” like invocations of the term “subprime,” is just a vague way of referring to a broader sense of big trouble in the financial markets and a looking period of bad times. Easy credit and a big trade deficit have both let people keep up very robust levels of consumption even at a time when the average person hasn’t seen his wages go up much or at all.

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