Last summer, the Euro was pretty strong compared to the USD thanks to tactics of the Bush administration in an effort to save the US economy. While the depreciated dollar seems to be a bad thing, there is good that comes from a cheap buck as well, under monetary policy. If the dollar weakens, we will notice an increase in our exports and our trade account will improve. To put it simply, output (GDP) will rise.
Guess what, SO WILL EMPLOYMENT!
Sadly enough, the USD is about 0.707 Euros. The dollar is becoming stronger and unemployment is now on the rise, no joke. Sure, it is obvious that unemployment is high, 9.5% as of June, according to the Beareu of Labor Statistics, but it should be lower.
With Obama in the White House, taxes are on the rise. Small businesses are being taxed left and right. These small firms must pay out more of their funds to employee benefits and in turn makes the firms less efficient, with smaller profits. Taxing entrepreneurs so highly destroys their chances of success and leads to more failures. As these firms lose money and go bankrupt, so do their employees. Everyone loses…uh oh, sounds like—-J.M.Keynes
Since the Federal Reserve is in charge of monetary policy and is not a government entity, I do not despise it quite as much as a president or government official practicing fiscal policy. So, let it be written, fiscal policy is a waste of taxes and your hard work. Do NOT fall for their trickery and vote for them to take your money. Do you really think they can spend your money better than you can? So, let it be done.
Therefore, we must rely on the Federal Reserve to regulate our money supply to keep the economy in balance. The Fed issues bonds to increase the money supply or buys bonds back to contract it. This is how they are able to regulate whether the dollar appreciates or depreciates, inadvertently.
