Sunday, August 7, 2011

Why are the German's calling Obama's economic policy "clueless"?

By making the dollar cheaper it increases the cost of their exports to the US. This hurts Germany. The idea for most of the G20 countries is to use exports as a growth engine. America being the largest economy would suck in those imports. The problem with that is that American industries lose out. As they cannot compete on price. So by devaluing the dollar American goods start to look good. The US then starts to export and Germany then buys the goods it was attempting to dump on the US. Easy really. What is needed however is stability and agreement not competition.

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