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American Automobile Fuel Consumption Debate

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Mike

It's funny how the article mentions that the only effect most Americans experience is an increase in prices for their European vacations. Just the other day, I heard Professor Marks complaining about the high costs of his New Years trip to Paris.

I can remember during the tech bubble burst hearing many companies blame slow returns on the "strong dollar" driving down overseas profits. It was obviously a little smokescreen, but at least now I know where the logic was coming from.

A question still lingers in my mind. If a weaker dollar is good for the global economy and for America (i.e. increase in exports and balancing of current-accounts), why did the U.S. have a "strong dollar policy" throughout the 90's?

Love to have someone complete the circle for me.

Mike

tc

I will try to stay away from the expensive French wines this holiday season - it sounds like the dollar needs all the help it can get. Anup and I got smoked by the exchange rate at the beginning of the summer - we were paid in dollars before leaving for England. The fluctuations in the dollar had a big impact on our budget.

This is pure speculation, Mike, but the article mentions the impact of exchange rates on interest and inflation. Maybe it made more sense to pursue a strong dollar policy when our rates were not so low.

Anup

If you were to ask Milton Friedman about the worries that Dollar is getting weak, he would tell you to ignore all the non sense. Listen to this lecture delivered by him more than 25 years ago at the Landon Lecture Series. Friedman talks offers the best defense of free trade (as far the developed countries are concerned) I have heard so far. You should get the view that depreciation of dollar may not be so bad, and is definitely better than having subsidies instead to keep the dollar strong artificially. As you listen to the speech, notice how Friedman talks about Olsonian problems, farm subsidies, steel tarriefs and so on. You can find the Art of Spending Money paper mentioned in the lecture here.

Anup

OK. The trouble with the comments section is that you can not post links in the text as I discovered now. So the links I referred to in the above posts are:

Friedman lecture: http://web.mit.edu/anupb/www/Producer_V_Consumer.ram
Art of Spending Money: http://web.mit.edu/anupb/www/spending_money.pdf
Landon Lecture Series: http://www.dce.ksu.edu/dce/broadcast/landon/index.html

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Thanks a lot for a bunch of good tips. I look forward to reading more on the topic in the future. Keep up the good work! This blog is going to be great resource. Love reading it.

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Right now the dollar almost match the euro. Economy is fully recover so there are nothing to worry about it.

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Are you talking about Tom Curry (the English soccer player)? I think that he was one of the most important men in the Premier league Newcastle United and Stockport County in the 1920s!!22dd

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