How catastrophic is George W. Bush's odd "strong dollar" policy?

Answer 1

It's not. Both a strong dollar and weak dollar have both positive and negative consequences.

A weak dollar means foreign goods and services become more expensive, and American goods and services become less expensive to foreigners.

So on the one hand, it means American's will buy less foreign made products, and more of their own. It also means that American made goods can compete stronger internationally. These are pretty good things, considering that for 20 years or so we've heard people bitching about the trade imbalance. This will also help reduce the loss of American jobs to outsourcing. This is why countries like Japan, China, etc. have historically kept their currencies fairly weak. Their economies depended on exporting to America. It also means tourism in the USA becomes more attractive for foreigners.

Unfortunately, it also means things like oil are more expensive. Ouch! It also means tourism to other parts of the world becomes less desirable to Americans.

A strong dollar, as we have historically had, means it's much harder for American goods and services to be sold to foreign countries. It also means it's much more likely for American manufacturing to be outsourced to other countries. However foreign imports are less expensive for us Americans.

Answer 2

What Policy?