The Falling Dollar

I have read with much interest about the falling dollar. As with everything, there are always two sides with different perspectives on what this means to the economy. Let's take a look.

On one hand, there is the belief that the declining dollar can be a good thing for the overall economy. Mark Zandi, chief economist at Moody's Economy.com is one of those who see the benefits of a weaker dollar. He says "After the pluses and minuses are all netted out, I think the lower-valued dollar is good for the economy. The growth we're getting from trade is helping to cushion the blow to the economy from housing." Others state that American exports will inevitably rise and with that increased jobs for manufacturing employees.

On the other hand, there is the feeling that a decline in the dollar is not healthy for the economy. They base this on the belief that a falling dollar will not significantly effect the out of control trade deficit. The argument goes that the two main components of trade imbalance- oil and imports from China- which combined account for about 80% of the trade imbalance, are not really affected by the swinging dollar. Peter Morici, an economics professor at the University of Maryland's business school, states "If you can't adjust imports of oil, and most are priced in dollars, and you can't adjust currencies against Chinese yuan, which is pegged to the dollar, depreciating the dollar does not get you where you want to go."

Most of the articles that I read on this subject always deal with the issue from either a trade or business standpoint. The trade deficit will/will not improve..big corporations will benefit ...but my question is- what about the effects on people like me? No, I am not a CEO or a trade magnet. I am just an average guy who sees a declining dollar meaning that the value of what little assets I have lose worth in real value. I see a country that has decimated its own industrial base to the point where there is a fraction of items that were once produced here. As a result of that, I see our stores flooded with 'cheap' imports that will rise in prices.

Maybe I'm a bit gloomy about this issue but I can't really find a silver lining that is good for me.