Dollar valuation
* The problem is that the value of the dollar in terms of foreign currencies has risen 30 percent in the last few years -- and is at its highest level since 1985!
* Markets usually keep foreign exchange rates reasonably in balance, but sometimes they get badly misaligned -- distorting world trade and creating huge trade imbalances. That's what's happening now because of the Treasury's "strong dollar" policy. As much as $300 billion of the $450 billion U.S. trade deficit is due to the rise in the dollar.
* The overvalued dollar has made U.S. exports much more expensive. For example, a $10,000 U.S. machine used to cost European buyers the equivalent of 8800 euros. But today that $10,000 machine costs European buyers 11,700 euros - one-third more.
* That has put U.S. exports into a tailspin and has mauled import-competing industries. Over 500,000 U.S. factory jobs have been lost from the export decline, and additional hundreds of thousands have been lost because of artificially cheap imports.
* The effect is exactly the same as slapping a new 30 percent tariff on "Made in U.S.A." goods. Congress and the Administration would howl with outrage at new tariffs, but have done nothing while the same damage is done by an overvalued dollar.
* In fact the damage is worse. Since foreign currencies are 30 percent cheaper than they were, this makes many import prices so artificially low that competing against them is almost impossible. The U.S. textile industry, for example, is being wiped out by the overvalued dollar.
* Farm exports and services trade are affected as well. Cotton, rice, and wheat exports are among those losing out to foreign competitors because of the overvalued dollar.
* We don't want a cheap dollar or an undervalued one - we want a dollar consistent with economic fundamentals - a sound dollar.
* Foreign exchange traders say the dollar would fall immediately were it not for the Treasury's "strong dollar" policy. But the Treasury's policy still hasn't changed, even though other government officials say the strong dollar is hurting manufacturing jobs and jobs and farm exports.
* The IMF, the European Central Bank, and others agree the dollar is highly overvalued and poses a real risk to U.S. economic growth and global economic stability.
* The last time the dollar was this high was in the early 1980's. The U.S. government acted then, and needs to do so again. We are overdue for a policy change. Every day of delay keeps more Americans out of work and risks forcing more firms to move offshore.
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