There is much dread expressed regarding the future of the U.S. dollar. Many seem to believe that America is simply printing money to fuel economic growth and to pay back debts. If that were true, inflation would be more problematic than it is, and interest rates would be higher. Moreover, the value of the U.S. dollar has actually been rising recently against many major currencies, not falling.
For instance, the dollar is faring especially well against the euro. Through early September, the dollar had gained about 5 percent versus the euro in 2014 and as pointed out by CNNMoney and other sources has been climbing against the Japanese yen and British pound, too. Many have been ploughing money into U.S. dollar denominated assets for a number of reasons, including to secure capital in a world characterized by spreading terror and Russian aggression.
While some may take pride in the notion of a stronger U.S. dollar, the rise of the dollar creates issues for a number of key economic players, including American manufacturers. When the dollar rises in value, the price of imported goods falls in real terms. This leads consumers and others to step up their respective purchases of imported goods, which has the potential to reduce the sales of American producers.
