Simply Put, Most Americans Don T Plan For Their Economic Future Very Well, And Are In Fact In Debt More Often Than Not

Category: Finance, Financial Planning.

The greenback has been slipping against the euro, and the pound, the Chinese yuan for the past nine months or so, reaching record lows amidst a global credit crunch and plummeting real estate prices.

According to the Federal Reserve, projected economic growth will slow from more than 5, and inflation remains a concern. What does this mean for US growth? But one figure does not an explanation give. As news of record mortgage defaults, and skyrocketing oil, volatile markets prices continue to trickle in from throughout the US, consumer confidence has tumbled and with it their spending has tightened. The dollar is an indicator of how strong and robust the US economy is, relative to other countries and currencies. This signals an impending shift that Americans will have to weather, but which actually provides a useful impetus for making some fundamental changes in the economy.

Simply put, most Americans don t plan for their economic future very well, and are in fact in debt more often than not. If Americans are forced to actually save, (rather than going into negative savings, as the average American has within the past two years) a falling currency can actually be absorbed without causing economic devastation. No matter how much growth the US economy may generally experience, it is unsustainable for our present levels of spending to result in a beneficial outcome indefinitely. A depressing currency also makes US exports cheaper for other countries, hence ensuring that demand for American labor will be attractive to foreign interests. Therefore, a falling currency forces a necessary economic reality to be faced, which may have a much better end result, even if the transition is somewhat unpleasant. While this may guarantee some growth, if US manufacturers aren t hiring Americans, (because we aren t willing to do the work and illegal immigrants are) the US cannot reap these benefits.

This has been a huge strength in US history, as American manufacturing and industrialization fueled its development into an economic powerhouse throughout the twentieth century. Hence another attitude shift is in order: That there are no jobs in America that Americans should be unwilling to perform. The falling dollar is also beneficial in that OPEC prices oil in dollars. Therefore OPEC absorbs the weakness of the dollar in tandem with consumers, thus placing no special burden on Americans. This means that even though oil almost reached 100$ a barrel within recent weeks, it was still less expensive than it could be if they decided to price oil in euros. If they were to price oil in another currency, Americans would be hard- hit, but perhaps the US would be able to cut back its dependence on foreign oil.

Above all, the US benefits from a less powerful currency because the current model for economic growth is unsustainable, if not downright foolhardy. It s possible that rising oil prices, coupled with the other factors mentioned, could trigger the growth of alternative energy production on a wider scale. In order for America to remain a world leader, it must be able to lead more than amount of products consumed. The US also has to be able to produce more sophisticated solutions for its weaknesses at a lower cost, which it now has the opportunity and incentive to do.

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