Weak currency policy on a collision course.

If the ship is heading into the iceberg, then full speed ahead. This still appears to be the current direction of US economic policy makers. This is not a new course for America. We have been on it for many years. This weak dollar policy rippled through and translated itself into many of today’s economic woes. QE2 may have been recently announced, but nothing in the course of policy direction have changed. The weak currency policy remains. Before any resounding conversation about our return to prosperity takes place, the policy direction must be addressed in favor of a stronger currency. The faster this key policy change takes place, the faster we can resume America’s prosperous march.

The role and placement of an economy in the world trading relationships and standings is a key to this view.

A more advanced economy must defend and maintain a strong currency policy. The more systematic productivity is exported for efficiency gains into the less developed economies, the more advanced economy must focus on the creation and improvement. Creation in a capitalist market system is accomplished by investment and risk. The more private capital is attracted into an economy the more focused will be its investment and risk. A weak currency discourages exactly the private investment needed for creating this economic activity. Moreover the more currency is debased the more currency is required for everything imported into this economy. And that places a significant burden on growth and stops the clock of societal progress.

The reason the jobs went overseas is so the new and better jobs could be created here. How did we go from agrarian society to where we are today? Why not turn back the clock?

Let’s take a look at case of 100% employment, where every citizen would have a job. Each day you would go to your job and never worry about loosing it, the economy would be so perfectly balanced there would be just the right amount of jobs for everyone. And in this exact situation all new significant societal progress would seize to exist. There would be no need or available human capital to invest in any new activity.

In order for progress to take place, some jobs would need to be exported at a lower cost. The savings that are derived from exporting the jobs together with newly unemployed people then could be focused on progress and creation. In effect we would export the jobs we no longer wanted and created jobs that are more endearing to our economy.

This is only possible if we have a strong currency, with debased currency the long term effect is that we will start doing the jobs that no one wants. Feel like plowing a field?

The real answer to a recovery in a market driven capitalist economy are the same as always: pro business and pro strong currency governmental policies, where prosperity comes from creation, growth and the re-balancing of public sectors.