Addison Wiggin explained the concepts he's informing us about in a very likeable manner and latest quick read, "Demise of the Dollar."
Wiggin touched on many concepts and wrote them in a way that will interest us "non-economist-but-interested folks." The Helicopter theory, pathological consumption, and wealth-driven consumption are delved into. Wiggin noted the many positive to a weaker dollar in comparison to a stronger one. He also gives us aspects of this weaker dollar that can benefit the investor, making this an appropriate and contemporary book. He notes accurately that the greenback is not the mainstay, and explains why and what the potential ramifications will be.
American fiscal actions and solvency are explained with some focus on the individual financial habits and psychology of the American consumer, whose spending on consumption propels 2/3 of the American economy. American government and consumer debt is noted.
As for the consumer, average per capita debt ratio is the highest in U.S. history, and home equity ownership is the lowest in U.S. history. Wealth in residential real estate, propelled low interest rates, interest-only loans, significant speculation, and pop-flipping, Americans may well be in a state of denial about the strength of the U.S. economy and their personal economic situation: a high percentage of net worth allocated in residential real estate - the house they just happen to be living in. All it will take is an economic hiccup. And, if there is no hiccup, we have wages that are flat and even declining in comparison to housing values and increasing levels of taxation.
There are many factors involved in valuation of currencies.
As Wiggin notes the positives of a weaker dollar,
Obviously, a weaker dollar benefits the U.S. economy as it's more interdependent upon our global economy. A weaker dollar can stimulate the creation of jobs, as well as maintain them. The American policy makers claim that want a strong dollar and promote and ostensibly proclaim a "strong dollar policy." This is not the case, as we all know.
But the question of the future may be: how low is good, and how low becomes bad?
Worth noting is that currency reserves held by foreign countries in part, are positioned by confidence in a currency and an economy.
The American economic engine may very well continue to plough along, with high debt ratios spurring longer work hours and most importantly, boosts in per capita worker efficiency.
As of August, 2005, the dollar is actually strengthening a bit.
Economists can explain the past, but they can't foretell the future, just like the rest of us.