Originally posted by Chuck E:
Our dollar is low against the gbp because of the fiscal policies of this administration, our debtor nation status and the war in Irag.
We will get rid of Bush in 2008 and someday, somehow, the hemmoraging of national wealth in Iraq will end. But our becoming a debtor nation will be a longer term problem.
Americans, on average, now have a negative savings rate. Being in debt has become perfectly socially acceptable. It has become the norm.
The Chinese and Japanese have a high savings rate. (Maybe KK has the numbers bookmarked? Is it as high as 10%?) In our country we place a higher value on high current consumption than on saving and investment.
Guess which countries have more money available for capital investment?
And most people aren't really all that concerned that the government, under Bush, is running record deficits with no end in sight.
As a nation we are borrowing and selling off assets to sustain a high consumption level. "The American Way of Life" we call it.
As individuals and as a country we would be much more likely to sustain a satisfactory long term consumption level if we had a high savings rate financing a high level of capital investment.
In part the weak dollar results from the judgment of the world financial system on our long term prospects.