RealClearMarkets’ Tamny: US Pursues Weak Dollar Policy at its Peril

Monday, 09 Jul 2012 08:51 AM
By Dan Weil

The Treasury and Federal Reserve are pursuing a weak dollar policy, as John Tamny, editor of sees it.

And the economy will continue to suffer if they don’t change course, he says.

"My view for quite some time has been that when we talk about economic problems in the U.S., we are really talking about symptoms of the weak dollar," Tamny tells Yahoo. "

If the stated objective of your monetary policy is to devalue dollars, it is going to be true that investment is going to be less such that economic growth is less."

Some economists say a weak currency is beneficial, because it boosts exports and curbs imports. But Tamny disagrees.

"Imports are beautiful. It is poor countries that don't import," he says. "If devaluation were the path to prosperity, then countries like Argentina and Zimbabwe and Turkey would be among the richest in the world."

So what’s the solution for the United States?

“The Treasury must announce that it’s pursuing a stronger dollar and peg it to something real,” Tamny says. “When it does that, the market will respond very quickly, and the U.S. economy will soar.

”To be sure, the dollar shows no weakness against the euro.

Indeed, the common European currency is near a two-year low against the greenback, with traders flocking to the dollar as a safe haven amid fears of a global economic slowdown.
© 2012 Moneynews. All rights reserved.