That just a few years the strength of the dollar was considered bad and hurts the U.S. industry. Everywanted wanted the Yuan (China's currency) to delink from the dollar so the U.S. can protect it's industrial jobs. Everywhere you look, the talking heads are all looking for the dollar to devalue because that's what this country now needs. Then take a look at it now with dollar trading ~15% lower vs. the Euro and Yuan vs. two years ago. The weaker dollar helped in areas like Boeing vs. Airbus, and we're feeling a little bit of the positive effects of better competitiveness in the world (Earning calls for companies with large international presence are all looking pretty solid). However, then you start taking a look at the few things that also came out of it. 1. Inflation due to devaluation of the dollar. Things are just way too expensive for the average American right now. 2. Part of inflation, but definitely deserve it's own mention... oil. Not only are prices going up, but the weakness of the dollar got the gulf leaders wanting to stop pegging oil to the dollar. What that will mean? Dunno but kind of scary. 3. Liquid capital, we are feeling a lot of stress due subprime market, and that would always be there. But for large foreign investors, the fact that the dollar in value lost 12 - 15% by itself would discourage some investments (or demand large premiums). This forces the feds to decide between adding liquitidy by adding more cash to the game (and causing more inflation) or holding back and letting some of the chips to fall where they may. Kind of makes you wonder that during all the fervor two ago, how many people actually understood what will happen if things really went the way that some in the U.S. wanted.
I'm no expert, but I've read that the American economy would collapse due to its large trade deficit and debt. America's consumerism is pretty financed by oil being traded in dollars. If oil was traded in Euro's the demand for the Dollar would drop like a rock, along with its value. It may not be a coincidence that America took out Saddam after he started started trading oil in Euros. We now control Iraq with its large oil reserves and we are buddy buddy with the Saudis.
