I hadn't watched a debate in a long time, so when I sat down last night to hear what the candidates thought, the evening turned out to be more scary than informative. Rather than have a sober discussion of the facts as they relate to a country struggling with 26 million people un- (or under) employed (see the U-6 measure here), the debate consisted of bombast, gotchas, nationalism, and unimportant talk about vaccines in Texas; all-in-all it had a strange rally type atmosphere about it. Oh, and the audience, again, seemed insane. In the previous debate, the audience cheered Perry's record of having executed a couple hundred people during his tenure as governor. Last night's audience cheered when there was talk of letting people die if they can't afford health care. But anyway.My main purpose in this post is to address the recent talk from the GOP about how a strong dollar would boost our economy. Last night this talk came mostly from Bachmann, Perry, and Ron Paul (if memory serves). I'm not sure how this thinking of theirs works, but the people I've asked seem to think that a weak dollar automatically creates inflation and that this is what's dooming our economy. Others simply won't explain. So, I've posted a figure (easily made at the amazing FRED site--go explore). The blue line represents the dollar's exchange rate versus other major currencies. The red line represents the rate of inflation. You'll notice them both trending down (in spurts) over the last 30 years. I just don't see why people think a weak dollar generates inflation (or hurts our economy in any fashion). What am I missing?
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