TEXT OF COMMENTARY
Lisa Napoli: The dollar hit another record low against the euro today. It’s down more than 20 percent from its peak in 2002 — so low, it’s about equal to a Canadian dollar.
Now, what difference does all this make if you’re not traveling? Marketplace commentator Robert Reich explains.
Robert Reich: Roman holidays may be more costly, but how many of us are going to Rome? Canada is pricier, but so what?
The biggest burden isn’t on American tourists. It’s on American consumers.
When the dollar falls, imports cost more. Lumber, plywood, and natural gas from Canada. Medical devices from Germany. Machine tools from Italy.
When Middle-East and Russian oil is priced in euros rather than dollars — which it surely will be as the dollar continues to slide — our energy bills will be far higher. When China seriously revalues — which it has to do as the dollar drops — every big-box retailer in America will be charging far more.
And plenty of American producers, who had kept their prices down for fear of foreign competition, won’t any longer. As imports cost more there’s less to fear.
The real worry isn’t inflation, as Wall Street thinks. It’s our pocketbooks. The bitter truth is that even as American exports do better as the dollar drops, most Americans get poorer.
Maybe we should get poorer. After all, the dollar’s tanking because we’ve been living beyond our means — borrowing some $2 billion a day from the rest of the world to go on buying from the rest of the world, and also paying for some big-ticket items, like a huge military. Rack up that much debt, and it’s no wonder our national IOU — called the dollar — is losing credibility.
But not all of us will get our comeuppance. Americans big enough to be able to shift their dollars into other currencies are doing just fine. That includes Wall Street investment houses, corporations with lots of cash, and the very rich.
So who gets hurt as the dollar slides? It won’t be Warren Buffett, who’s already converted more than $20 billion bucks into other currencies. It’s going to be those of us who can’t hedge against the fall, and whose dollars are already stretched to the limit.
Napoli: Commentator Robert Reich served as Secretary of Labor under President Clinton. His new book is called “Supercapitalism.” In Los Angeles, I’m Lisa Napoli. Enjoy your day.
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