The Big, Bad Baht and the Itsy Bitsy Dollar

One of our days in Bangkok, the headline in the International Herald Tribune read “Thai official appeals for global action on the dollar.” What international action you might ask from your ocean- or continental-induced isolation? Well, it seems that the value of a dollar has dropped so precipitously over the past year that small economies around the world are struggling as a result. Now, I’m no student of economics, so those of you who are must forgive me. I slogged through one Microeconomics course in college, but nothing I learned can help me get my head around the relationship between exchange rates, trade imbalances, and economic growth. In a nutshell, the dollar’s in the toilet, which for me, means my current travels are much more expensive than they have been in the past. Inflation aside, travelling through Thailand today costs me 11% more than it did in summer 2003 and 8% more than it would have in January of this year. I’m not going to Western Europe because the Euro had gained 32% on the dollar since I was last there in the summer of 2000.

Tom and the newspapers tell me that President Bush favors a weak dollar and has purposely driven its value down in world markets so that our American exports will be cheaper to the rest of the world. If we can sell more of our stuff abroad, the low dollar will help offset a small fraction of our gargantuan trade deficit (Americans it seems have an insatiable appetite for cheap Chinese goods). The US gets particularly mad at China for doing the same thing–keeping the value of its currency, the yuan, artificially low in order to fuel its export market. The problem for Southeast Asian economies is that the weak dollar means a strong local currency, which makes foreign investment less attractive. The problem for Americans is the dollar seems to have slipped beyond the government’s expectations and can’t be resuscitated. As an American traveling side by side with Europeans, Canadians, and Aussies, all of whose currencies have gained serious traction against the dollar, I can only shrug my shoulders as daily they seem to spend less and I seem to spend more.

I don’t know whether a puny dollar will actually benefit the US in the long run, but it sure makes us feel like economic weaklings in the travel world. Darn.

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One thought on “The Big, Bad Baht and the Itsy Bitsy Dollar

  1. The government has been printing a lot of money at a very fast pace for a very long time. I think the inflation stats are really messed up, too.

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