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Now I am officially dense, but would not then the asian manufacturers also get slaughtered if the prices stays fixed in USD and their local currencies increase against it?

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by A swedish kind of death on Wed Sep 30th, 2009 at 07:12:46 PM EST
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Yes, which is why the latter would most likely be the unavoidable consequence of the former.
by Bernard on Thu Oct 1st, 2009 at 12:01:19 PM EST
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... being denominated in a currency and prices being fixed in a currency.

If Asian manufacturers found that they are exposed to more supply price risk in prices fixed in dollars than demand competition, the benefit of a moderately lower dollar might well offset the damage.

A drop in the relative terms of trade faced by the US would both make resources originating from the US (and North America in general) less expensive, as well as reduce competition from the US in markets like international markets for crude oil.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Tue Oct 6th, 2009 at 06:47:06 PM EST
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