After reported currency intervention by Asian economies and Brazil, Europe today reiterated its desire for a strong dollar as well.
Bloomberg: French President Nicolas Sarkozy’s counselor, Henri Guaino, said today in Paris that the U.S. is “flooding the world” with dollars and that the currency’s weakness may become “unbearable.” Eric Woerth, France’s budget minister, said the euro’s gains are hurting the region’s competitiveness.
“We all note with considerable attention the statements made by American authorities as regards their support in favour of a strong dollar,” Trichet said in Luxembourg yesterday.
“We want a strong dollar; we need a strong dollar,” French Finance Minister Christine Lagarde said in Luxembourg. “We must remain disciplined” on the message, she said.
This reminds us that almost the entire world wants a strong dollar, which in turn means that they want their own currencies to be weak. It’s peculiar then how many Americans are of the complete opposite mentality – they want their home currency to be strong. This is a very convenient view for foreign exporters.
Many Americans equate a strong dollar with a strong nation. Yet if this were absolutely the case, wouldn’t other major nations be cheering strength in their currencies? Why does the entire world, rather, push for weak domestic currencies?
It’s time to stop fighting a natural economic adjustment long overdue. Yes, the U.S. government and American people should be more responsible with their spending. Yes, a complete dollar collapse also isn’t desirable. Yet we shouldn’t be concerned if the dollar slides otherwise, it might actually lead to a more sustainable form of U.S. GDP growth.