Best Political Option: Kill the Dollar

Friday, October 09, 2009

Spot on musings from Tim Knight over at Slope of Hope:
One other item which did occur to me is this...........if you're in charge of a government, and your success depends on your popularity with the people, and you could choose to either (a) kill the dollar or (b) kill equities, which would you choose? The wise choice in the short term (which is all that matters if you're an American politician) is the dollar. Why? Because hardly any citizen understands it.

If the stock market loses 40% of its value, that effects a lot of Joe & Marge Sixpacks out there. And most of them will understand it, because their 401-k will be turned into a 201-k (hyuck hyuck hyuck hyuck ). The idea that something they own is now worth 40% less actually gets through most of the skulls out there.

But what if I challenged you to walk down a random American street and ask the first adult you saw to explain in even the most basic terms what it means to have a falling dollar? How about if I asked you to query 100 different adults? How many do you think could do a reasonable job explaining to you even what a cross-currency valuation represents, and how it affects the economy?

My guess is probably 2 people could explain, and that is a kind estimate.


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