Well, I’ve experienced the effects of the ‘weak dollar’ first hand over in Merry England.
If my memory serves me correctly, the dollar to pound conversion rate used to be around $1.30 to $1.50 per pound. That means if you by a bottle of pop for 50p, you’re really paying roughly $.75. On this recent trip to England, the dollar stood at roughly $2 per pound. Now that same 50p bottle of pop costs me $1.
This devaluing of American currency has a couple of effects. First, I found myself not wanting to buy as much as I might have, had the conversion rate been better. They wanted 6 pounds ($12) to get into Stonehenge. Five pounds ($10) to get into Kenilworth, and 2 pounds ($4) for a bag of chocolate (which I actually bought gladly, since American chocolate is really just brown painted wax). The end result is that everything was quite expensive.
In other words, I’d rather spend my money in the USA where I can get more bang for my buck. So the upside to a weak dollar is that this desire to buy in America isn’t just limited to me and my fellow Americans. All of the products we make are suddenly cheaper everywhere in the world because you can get more dollars for your yen, your euro, and your pound. US manufacturers probably don’t mind the weak dollar.
The people who do mind it are people who make things in other countries, and import them. They have to pay more for the same goods. Products outside of America now cost more. Electronics, oil, anything we import is going up in price.
So, if you regularly buy American, or export things to other countries, then things are looking up. If you like your Japanese electronics, or are importing, then get ready to shell out a bit more this Christmas.
Wow, my blog has turned to economics lessons. We can only go up from here…