October 21, 2009

Matt Drudge Takes Down the Dollar

A story at the Politico essentially argues that Drudge is playing politics with the decline of the U.S. dollar:


On Tuesday, Matt Drudge ran a headline about the weakening U.S. dollar on his website, Drudgereport.com. In and of itself, that would be unremarkable, except that it was the 18th time Drudge had posted a link to a story about the weak dollar this month.

And October was only 20 days old.

Clearly, Matt Drudge has developed a fascination with the declining U.S. dollar.

“He’s fixated on it,” said Tom Rosenstiel, director of the Pew Research Center’s Project for Excellence in Journalism. “There’s no question that Drudge can alter what people are paying attention to.”

[...]

Drudge also has tried to tie President Barack Obama to the dollar’s plunge. “Obama Dollar Retreats Most Against Commodities in Wealth Shift,” noted Drudge’s link to a Bloomberg story Oct. 13. “Obama Under Fire Over Dollar,” he headlined Oct. 7, linking to a story in the Financial Times.


Nevermind the fact that he is linking to stories from other sources with this theme. Of course, such discussion is common regarding the dollar and the president. The BBC reported in 2004:

But the pace of the dollar's decline has picked up since President George W Bush - whose heavy spending has pushed the US finances into the red - was elected to a second term in office last week.

Are we to believe that the spending policies of the current administration will somehow have different effects on the value of the dollar?

The best part of the Politico is this excerpt:


What’s more, there’s one economic upside to a soft dollar: increased exports for U.S. manufacturers. Reporter Nelson Schwartz noted in an article in The New York Times on Sunday: “A weak dollar could prove beneficial to the American economy by aiding long-suffering manufacturers, rebuilding a stronger industrial base and lifting exports even if it makes life harder for trading partners around the world, especially in Europe.”

But that Times article, titled “In Dollar’s Fall, Upside for U.S. Exports,” did not receive a link from Drudge.


Of course, the degree of this effect is dependent on elasticities. Even beyond that, however, defending the declining purchasing power around the world as a positive sign because it boosts exports is like arguing that the upside to unemployment is that we all get to experience more leisure.

Economics and Markets Posted by Harrison Bergeron at October 21, 2009 12:33 PM

I hope Mr. Javers never tunes in to CNBC when Kudlow is on!

I'll quibble a bit with your closing analogy, hb. A large sector of the economy gets most of its revenue from exports, and those industries have a legitimate and rational reason to cheer a weaker dollar.

Don't report me to Larry -- I'm still a strong dollar guy!

Posted by: jk at October 21, 2009 1:31 PM

Better not read Jimmy P either: Paul Volcker: Obama’s forgotten man

Posted by: jk at October 21, 2009 1:43 PM

Seems to me the Administration is doing enough damage without Matt Drudge's help. ThreeSourcers, of course, will not be surprised to read this; in fact, there's a bittersweet tinge to being able to say "we told you so - in advance" to this:

http://www.republicans.waysandmeans.house.gov/News/DocumentSingle.aspx?DocumentID=150826

Posted by: Keith at October 21, 2009 3:54 PM

Keith, don't you know, Drudge must be the most dangerous man in the world. No matter how much the Fed is trying to save the dollar, Drudge's mere words are enough to convince the world to dump it!

JK, not everyone exports or is within a degree or two of separation from exports. However, most Americans are within a degree or two of imports. Now, no one can know the true value of the dollar. Only an entire free market, with all its uncountable transactions, can reveal it. Let's call that point X. If the dollar is weaker than X, it's a form of protectionism because it benefits the minority of the economy that exports.

Deliberately weakening the dollar is a favorite tool of people unnecessarily worried about the U.S. trade deficit. (Warren Buffett is one such idiot who thinks we shouldn't import more than we export.) These people either don't know or refuse to admit the havoc that would ensue.

All this is besides the fact that the Fed is inflating the money supply to monetize the huge increase in budget deficits. I've been saying it for damn near a year now: there just isn't enough money in the world to finance it. Even if foreigners did have the willingness, they're already tapped out.

Posted by: Perry Eidelbus at October 21, 2009 8:58 PM | What do you think? [4]