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From: dlo@drutx.UUCP (OlsonDL)
Newsgroups: net.politics
Subject: Re: dollar economics
Message-ID: <580@drutx.UUCP>
Date: Thu, 14-Nov-85 12:52:54 EST
Article-I.D.: drutx.580
Posted: Thu Nov 14 12:52:54 1985
Date-Received: Fri, 15-Nov-85 21:15:25 EST
Organization: AT&T Information Systems Laboratories, Denver
Lines: 57

[]

In article <1120@jhunix.UUCP> ins_aprm@jhunix.UUCP (Paul R Markowitz) writes:
>This is
>further compounded by the fact that foreign companies are taking the money they
>earn and are investing it in the US where they can get a better rate of return.

I sincerely hope so!  Do you really want that much needed investment
taken away?  Investment into the US economy means nice things like more
jobs.  Indeed, unemployment is still high, but it would be even worse 
without the investment.

>Eventually, the dollar apreciated
>significantly as a result of increased real interest rates due to the
>profitability of US investments.  The result is the current situation.

But, that is circular logic.  There is more to the value of the dollar
than just getting more of them.  And, I knew somebody would bring up
"real interest rates" (I assume you mean subtracting inflation from the
prime lending rate).  Even if such a concept was valid, it does not
account for the dollar's value. i.e. the differences between those
percentages are about the same now as they were 5 years ago.

>What needs to be
>done is the accelerated depreciation allowance needs to be revoked in an
>attempt to make investment in the US less attractive. 

Take away the life blood of the economy away!  You have got to be kidding!
Where do you think money for things like facilities and tools come from?
Do you think that this money just falls from the sky?  Besides, the more
money invested by foreign countries, the less likely those countries will
try to undermine the US economy, since that is where their money is.
They would be cutting their own throats!

>This will reduce the
>upward pressure on the dollar and solve at least part of the problem.
>The domestic economy may suffer a little for it but probably no more than it
>already is suffering from huge increases in the money supply that are necessary
>to pay interest to foreign investors.

A few years ago, it was thought to be a bad thing that the US loaned so
much money to foreign countries.  Remember the concept of the "debt
bomb"?  Bad to loan money to others; bad for them to loan money to us.
Interesting.  Besides, after WWII, the US loaned massive amounts of
money to Japan and Germany for rebuilding.  They became huge debtor
nations and have apparently done quite well thank you.

Besides, even if what you said is true, how does that prove that devaluing
the dollar will NOT make prices for the already expensive domestic goods
even more expensive?

>Paul Markowitz

My opinions are my own, and do not necessarily reflect those of my employer.

David Olson
..!ihnp4!drutx!dlo