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Originally Posted by godfry n. glad
Actually, a falling dollar (relative to other world currencies) should be good news for economic activity in the U.S. It means the goods we sell overseas should be relatively cheaper, and thus in higher demand. The falling dollar is a reflection of the crappy balance of trade between the U.S. and it's trading partners.
It should also slow tourism which uses the U.S. dollar as its engine, and, if it falls sufficiently in comparison to other currencies, make it more attractive for other nationalities to visit the U.S., rather than the other way 'round.
As for possibility of a national (or even international) depression...I'd say yes, it could happen. It'd take a major collapse in demand for goods and services. Less demand, less work to produce the products and services demanded. This could be achieved when the major portion of the purchasing public (the middle class) realizes it's waaaaay too far in debt and reduces consumption in an attempt to reduce that debt.
The world economy is much more interconnected than it was in the 1930's and thus I suspect that a domestic reduction in demand would lead to a short-term fall in prices and layoffs until other national markets started stepping in and purchasing U.S. goods at bargain prices. Of course, there is always the possibility that other markets are already too saturated to allow this and other economies would go into the tank, following the U.S. - China, for one, would be irrevocably hurt economically by a U.S. depression.
It would take an initial shock to push the U.S. economy into a major depression (and I thought that 9-11 was going to provide just that). The conditions for the early 20th century depression were well in place before the 1929 stock market crash, but that shock pushed the whole economy into the deepest economic depression of our history. Runs on banks followed and assets dried up very quickly. (I suspect that a rapid neutering of the U.S. military-industrial complex, as heartily wished for by so many peaceniks - like myself - would lead to a national economic depression. I'm sad to say that my nation is an armaments junkie.)
Curiously, the relative empoverishment of the middle class in the U.S. via the recent Republican administrations has worsened the situation by making it more likely that there is a significant portion of the population with purchasing power sufficient to respond to various monetary incentives to brake a downturn. The current mindset amongst the economic nabobs seems to indicate that fiscal policy (government spending) aimed at bettering the condition of the U.S. public (rather than monetary policy) would be immediately unlikely....in other words, the same thing that happened last time. And this despite excessive spending on weapons of destruction and feeding the war machine.
What can you do? Find a rich sponsor whose debt does not outweigh their assets and become a toady. Ass-kissing will get you far.
godfry
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godfry, please cease and desist. You are besmirching the good name of
s everywhere. May I humbly suggest you use the term "ass-kissing sociopatic neocon" instead
