Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP Posting-Version: version B 2.10.2 9/18/84; site sdcrdcf.UUCP Path: utzoo!lsuc!watmath!clyde!cbosgd!ihnp4!houxm!mtuxo!mtunh!vax135!cornell!uw-beaver!tektronix!hplabs!sdcrdcf!jonab From: jonab@sdcrdcf.UUCP (Jonathan Biggar) Newsgroups: net.politics Subject: Re: The dollar and the trade deficit. Message-ID: <2456@sdcrdcf.UUCP> Date: Wed, 13-Nov-85 14:17:35 EST Article-I.D.: sdcrdcf.2456 Posted: Wed Nov 13 14:17:35 1985 Date-Received: Sun, 17-Nov-85 13:01:30 EST References: <533@drutx.UUCP> Reply-To: jonab@sdcrdcf.UUCP (Jonathan Biggar) Organization: System Development Corp. R+D, Santa Monica Lines: 26 In article <533@drutx.UUCP> dlo@drutx.UUCP (David Olsen) writes: >The dollar's value can be controlled here, but you cannot make its value >in the US *different* than its value in some other country. If its value >is made higher here, it is made higher everywhere else also. Lower >elsewhere, means lower here too. The dollar's value against the yen in >the US is the same as the dollar's value against the yen in Japan. It >is the same dollar. The dollar that purchases foreign goods is no >different than the dollar that purchases domestic goods. A devalued >dollar makes *both* proportionally more expensive. Consider the situation in Mexico. The dollar will trade for (lets say) 300 pesos at a bank in the US. But a bank in Mexico will give maybe 320 and a shop owner in Tijuana will give 400. All of this at the same instant on the same day. The value of the dollar is relative based on the particular individuals in a transaction. The amount of distance we currently call an inch will not change if we change our definition of inch. A piece of paper 8.5 x 11 inches will not change in REAL size if we change the definition of the inch. A dollar does not work that way. If the exchange rate between the dollar and the yen is changed, and all Americans stand by the new rate, then Japanese can only choose between using the new rate or taking their business elsewhere. The value of the dollar changes just because someone (or a groups of people) says so. Jon Biggar {allegra,burdvax,cbosgd,hplabs,ihnp4,sdccsu3}!sdcrdcf!jonab