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I'm curious if the lower dollar helped boost orders in December. It certainly seems possible given the boost it has given other areas of the economy. People around the world can finally afford to purchase U.S. goods and it certainly seems likely that the longer the dollar stays around where it is the more exports the U.S. will have. My Dad's business has all of a sudden seen a rise in international orders, and another local business has also been receiving more orders from outside the country.

I've never really been able to tell if the lower dollar is necessarily a good or bad thing. I don't think it's a terribly bad thing, but given the nature of how it got to where it is I wouldn't say it's good for the economy in the long run (the Fed has been printing a lot of money). It's hard to say (as with everything else).

David K

The lower dollar does stimulate sales of US made goods because an adverse exchange rate is a tax on a purchase. As a Canadian I can buy stuff made in the US a what is essentially a discount and if you look at the stats of Canadian/US trade you’ll see more Canadians are buying from the US.

One other thing. I don’t know if you’ve come across this metric, David, but it is extremely interesting: US goods shipped overseas are growing lighter and more expensive per item. Once the US was a world leader in shipping pig iron and steel, now not so: the US imports pig iron and exports specialty steels (of which now the US is the world leader). Essentially, while commodities have value, the US taking these commodities and enhancing the value is what the US does well. Its one reason why US made production machinery sells in export: China’s growth is also because China imported production machinery from the US.

And, with a lower dollar, more of this is being sold overseas. As one Canadian economist said recently, with the lower US dollar Canada can increase its productivity through improved machinery made in the US.

Part of me thinks about the Yukon gold rush and who actually made money in the gold fields and it was those supplying the means to extract gold. So the US sells what are essentially the picks and shovels of production.

As US exports grow lighter the value of these is high. Back in the mid 1980s I invested in Microsoft because of this view of lightness. How much weight of a CD is the program on it? Nada. So my investments have trended in that way. I bought Garmin not because of the GPS units themselves but the programming that made them useful.

See my drift? Sure, commodities can be a good investment since these commodities are needed as in supply and demand yet those who take these commodities and add value (to make them lighter) will, my view, be the better long-term investment.

What are your views on this?


PS: What business is your Dad in?
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