The Falling Dollar Is a "Symptom of U.S. Economic Ills"

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That's what USA Today told readers. It would be interesting if the article explained to readers how it made this determination. In fact it seems rather evident that the over-valued dollar was a main cause of the country's economic ills. The high dollar is the main cause of a trade deficit that approached $800 billion, or 6 percent of GDP, in 2006. It has cost the country millions of relatively high paying manufacturing jobs, putting downward pressure on the wages of workers without high school degrees. The trade deficits of recent years were not sustainable. (They were two to three times the size of the budget deficit over the last three years.) The only way to bring the trade deficit down on a sustained basis is by reducing the value of the dollar. This is a necessary adjustment, not a "symptom of U.S. economic ills."

--Dean Baker

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