This is actually a fallacy. Yes in theory a weak dollar makes exports cheaper. But that only holds true if your economy is geared to exporting, like the EU and other countries. The US has exported much of its manufacturing base to 3-rd world countries thus eliminating any real export advantage of a weak currency. But such a theory does work in pacifying the masses and preventing a panic when reported in the US media.
If the US economy was geared towards exporting more emphasis would have been placed on metrication to support an export economy. If the US wanted to be an export country and attempted to export FFU products rather then metricate, this policy would have failed long ago and really driven home the importance of metrication to US industry and the public. But since metrication plays an extreme minor role in US manufacturing is proof enough that exports are not part of the US economic strategy and any advantage a weak currency offers to exporting is lost on the US market. Also many countries follow industrial standards, most metric based, when engineering, designing, manufacturing and marketing products. Especially industrial goods. Not following those standards can be a very potential source in having ones products rejected no matter how cheap they may be. US companies attempting to export may run into such road blocks when bidding and quotes are tendered and the contract requires the use of the metric system and/or metric system components and the US company can not comply. There are many obstacles that an American company can encounter when its products don't conform to the standards the rest of the world uses. Hopefully a crisis will open the eyes of American businesses of how important it is not to be different then the rest of the world. The following article should explain why the weak dollar will have negligible effects on US exports: This raises the question as to whether the falling dollar against the euro will lead to corrections in the trade deficit between the euro zone countries and the U.S. - reducing its dependence on foreign capital inflows. More is made of this than is going to happen. The argument is that a falling dollar against the euro will stimulate U.S. exports to and retard imports from euro zone countries. There will be some of this but it will be negligible and not strong enough to offset trends in the other direction. Outside of some sectors - agriculture, autos, tourism - the export/import accounts will not change much for several reasons. First, it takes a long term commitment to turn around a U.S. manufacturing sector that is not geared to export markets and has not been for decades. U.S. manufacturing companies long ago decided on a foreign investment strategy where they produce around the world and sell to foreign markets from this platform instead of manufacturing in the U.S. and selling internationally. In fact, a large part of the U.S. trade deficit consists of U.S. companies manufacturing in other counties and selling in the U.S. markets, which show up as imports in U.S. international accounts. The best estimates are that around 45 percent of all U.S. imports are intra-trade within U.S. companies that produce outside the U.S. and sell inside the U.S. This strategy is set in management concrete and will not change. A second reason is that U.S. GDP growth will continue to be stronger than euro zone growth, encouraging U.S. purchases of euro zone products while discouraging EU purchases of U.S. products. The Bush administration has based its weak dollar strategy on a false premise around improvements in the trade deficit, which will not substantially materialize, in contrast to Clinton's treasury secretary, Robert Rubin, who fashioned a strong dollar policy, knowing that the strong dollar policy made the U.S. attractive for capital inflows. This illustrates another of the dilemmas of a reserve currency country that imposes difficult obligations while it accrues benefits. The reserve currency country takes on the function of a buyer-of-last-resort in international markets, the universal bazaar, running large current account deficits, as it accumulates capital from other countries to offset this deficit. The British found themselves in this dilemma when it was the reserve currency country and the U.S. has assumed this role since the mid-1980s. The conclusion is that dollar vulnerabilities offer a window of opportunity for the euro to challenge the dollar as a reserve currency, but only if the stability and growth pact is modified, EU inter-country bank practices are reformed and the technological gap is diminished. Recent dollar weakness, Washington's retreat from internationalism both in military and financial policy, and imprudent domestic budget deficits have elevated interest in this option. The value of dollar reserves held by countries has fallen slightly, some modest portfolio repositioning has appeared, including denominating some crude oil sales in euros instead of dollars. This provides the target for EU strategic moves. If it can convince oil exporting countries to accept euros instead of dollars, a new theatre in the conflict will be established. The country to watch is Russia and whether it will denominate its oil sales in euros. Tempting it with the preliminary steps toward membership in the EU is an obvious EU bargaining chip. Link to full article: http://www.globalpolicy.org/socecon/crisis/2003/10almightyeuro.htm See also; http://www.globalpolicy.org/socecon/crisis/index.htm#deficit http://www.globalpolicy.org/socecon/crisis/2003/07gpfdollar.htm ----- Original Message ----- From: "Brian J White" <[EMAIL PROTECTED]> To: "U.S. Metric Association" <[EMAIL PROTECTED]> Sent: Wednesday, 2003-12-31 12:17 Subject: [USMA:28042] Re: Collapse of the dollar > Falling dollar prices make US goods less expensive overseas. Therefore, > my concern is not the 'weak' dollar and the falling from grace as an > economic powerhouse it may seem...but how this week dollar could contribute > to US-made non-metric items being sold less expensively in other countries.
